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Turkish lira loses value: President Erdoğan dismisses three central bankers

2021-10-14T09:10:10.421Z

The relationship between the Turkish president and his bankers is considered tense. Erdoğan's latest move now had a direct impact on the Turkish currency.



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Recep Tayyip Erdoğan: dismissed by decree

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Uncredited / dpa

Turkish President Recep Tayyip Erdoğan once again intervened in the national central bank's personnel policy.

With a decree published that night, three central bankers were dismissed.

The local currency, the lira, reacted with significant losses and fell to a record low against the US dollar.

The lira also fell noticeably against the euro.

After the decree became known, the US dollar rose to 9.19 lira.

Never before have so much lira had to be paid for a dollar.

One euro cost up to 10.67 lira.

The record high of 10.75 lira for one euro is not far away.

The lira then recovered only slightly over the course of Thursday.

As the document shows, the three dismissed members of the Monetary Policy Committee have been replaced by two new ones.

According to media reports, at least one of the dismissed is said to have voted against the central bank's latest interest rate cut.

Four central bank governors since 2019

The presidential office said on Wednesday that Erdoğan had met with central bank chief Şahap Kavcıoğlu and published a joint photo. Kavcıoğlu, who has been in office since March, is the fourth central bank governor since 2019. All of his predecessors fell out of favor because they did not support Erdoğan's preferred course of loose monetary policy. Although Kavcıoğlu switched to Erdoğan's course at the end of September, there has recently been speculation about a clouded relationship between the two. Kavcıoğlu is a former MP for the ruling AKP party.

Turkey has been suffering from high inflation for a long time, against which, according to traditional economics, a tighter monetary policy with higher key interest rates will help.

Erdoğan does not share this view and instead advocates rate cuts as an antidote.

He always presents himself as a declared opponent of high interest rates.

lukewarm / dpa

Source: spiegel

All news articles on 2021-10-14

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