Turkey’s economy faces further turmoil after the surprise removal of the central bank governor by President Recep Tayyip Erdogan added another chapter to years of unpredictable economic policy, scaring foreign investors and possibly sowing the seeds of a crisis. financial
Last Friday, Erdogan replaced Naci Agbal with Sahap Kavcioglu, a former member of parliament for Erdogan’s Justice and Development Party, who publicly sided with the president’s calls for lower interest rates, despite inflation. it reached 15.6% annually in February.
Erdogan, who has laid off three central bank directors in less than two years, prefers low rates as part of a strategy to encourage growth.
He opposed the policies set out by Agbal, who raised interest rates in an effort to fight inflation and help Turkey emerge from the brink of crisis. Agbal’s policies encouraged investors to return billions of dollars to the country since he was appointed in November.
Agbal’s firing triggered one of the worst sell-offs of Turkish lira-denominated assets in a single day on Monday, as investors reduced their exposure to the currency. The lira fell 7.5% against the dollar in one day. Kavcioglu has tried to reassure markets that it would curb inflation, but has not said whether interest rates will change.