Turkey’s Lira fell 17% After Erdogan Fires Central Bank Chief

Shafaq News/ The Turkish lira dropped about 17% against the dollar following President Recep Tayyip Erdogan’s decision to oust the country’s central bank chief -the third central bank governor exit in under two years- wiping out nearly all the gains for the currency under his four-month tenure.

The decline put the lira within a few percentage points of a record low reached on Nov. 6, the day before ex-governor Naci Agbal was appointed.

The lira traded at 8.3974 against the dollar which is the lowest record since last November.

According to Bloomberg, Treasury and Finance Minister Lutfi Elvan said Turkey will continue to stick to free markets and a liberal foreign-exchange regime. The government will continue to prioritize price stability and fiscal policies will support the monetary authority in its efforts to rein in inflation, he said on Monday.

“I expect massive state bank intervention in the short term to hold a line on the lira,” said Timothy Ash, a strategist at BlueBay Asset Management in London, adding that he’s not yet sure where the line will be drawn. “The new governor will be dependent on utilizing the reserve bounty that the former governor left him to smooth his entry into the job.”