Turkish markets rattled after surprise firing of central bank head
Turkey’s lira and main stock index slid about 9% Monday as markets reacted to the surprise removal of the nation’s central bank chief amid broader political turmoil.
ISTANBUL — Turkish markets plummeted Monday after the surprise weekend dismissal of a central bank chief sparked concerns that a recent set of hawkish monetary policies favored by investors would be reversed.
Turkey’s lira temporarily fell about 15% against the US dollar in early trading Monday before recovering to 10%, trading near 8 liras per greenback through most of the day. The Borsa Istanbul’s main stock index also saw its steepest drop since 2013, losing more than 9% and triggering several trading halts amid financial turmoil.
The market jolts came in response to Turkish President Recep Tayyip Erdogan’s shocking decision to sack central bank governor Naci Agbal by decree early Saturday. No reason was immediately given for the dismissal, but in his four-month tenure, Agbal pursued tight monetary policy measures with aims to stem the nation’s double-digit inflation, the most recent of which raised the nation’s key interest rate by 200 basis points to 19% Thursday.
Agbal was replaced by Sahap Kavcioglu, who became the nation’s fourth central bank chief in two years. A former banking professor at Istanbul’s Marmara University, Kavcioglu was a columnist at the pro-government Yeni Safak newspaper, where he argued for lower interest rates, writing in a column last month that “interest rate increases will indirectly lead to an increase in inflation.”
