The Turkish Lira plunged against the U.S. dollar on Monday, as President Tayyip Erdogan ousted Turkey’s central bank chief Naci Agbal for hiking interest rate to contain double-digit inflation.
Over the weekend, Erdogan announced that he had removed Naci Agbal and Sahap Kavcioglu will become new central bank governor.
The move came two days after the Central Bank of the Republic of Turkey hiked its benchmark policy rate by 200 basis points to 19 percent to tame its high inflation rate.
Kavcioglu, who was a lawmaker in Erdogan’s ruling party, favors a lower rate policy.
In a statement on Sunday, the central bank said it “will continue to use the monetary policy tools effectively in line with its main objective of achieving a permanent fall in inflation”.
Erdogan’s decision rattled markets, which welcomed a tighter monetary policy to help stabilize inflation.
The Turkish Lira fell 15 percent to 8.2882 against the greenback, its lowest since November 2020.The pair had ended last week’s trading at 7.1956. The Lira is likely to find downside target around the 8.5 level.
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