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Turkish lira hits record low on central bank sackings
Updated 23:22, 14-Oct-2021
Louise Greenwood
Europe;Turkey
Turkish President Tayyip Erdogan meets with Central Bank Governor Sahap Kavcioglu in Ankara, Turkey on Wednesday. The sackings occurred within hours of this photo being taken. Murat Cetinmuhurdar/presidential press office via Reuters

Turkish President Tayyip Erdogan meets with Central Bank Governor Sahap Kavcioglu in Ankara, Turkey on Wednesday. The sackings occurred within hours of this photo being taken. Murat Cetinmuhurdar/presidential press office via Reuters

The Turkish lira has fallen to a new low after President Erdogan sacked three key figures from the country's central bank, and hinted at a further military incursion into Northern Syria.   

The currency had slumped to 9.18 against the dollar by mid-morning in London on Thursday. The lira had already been falling after the central bank cut the headline borrowing rate by a hundred basis points last month, in a move that surprised the markets.  

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A late-night decree from the president's office on Wednesday announced the sacking of deputy governor Semih Tumen along with monetary policy committee member Abdullah Yavas, without making further comment. 

A third deputy governor who was also dismissed, Ugur Namik Kucuk, had reportedly been the only policy maker to oppose September's rate cut, which reduced the cost of borrowing to eighteen per cent.

The lira has now fallen by a fifth in value this year. Figures from the country's chief statistical agency show that Turkey is continuing to grapple with inflation. Consumer prices rose at an annual rate of just under twenty per cent last month, four times the central bank's target.

The Turkish President, a vocal opponent of interest rates, said last week that inflation in Turkey would drop to single digits soon and has launched an investigation into supermarket pricing policy, blaming higher prices on profiteering by food retailers. 

On Monday, in a move that rattled investors, President Erdogan also hinted at a further military offensive in Northern Syria. It came after a missile attack in the Azaz region, blamed on pro-Kurdish YPG fighters, killed two Turkish policemen.

"Turkey's central bank is in disarray,”Timothy Ash of Blue Bay Asset Management told CGTN. "Globally inflation is rising, so to be cutting rates now makes no sense."

With Turkey's central bank due to meet to discuss interest rate policy next Thursday, market watchers are bracing for another rate cut soon. "They have just got rid of the figures who opposed this, so another full percentage cut looks likely", Ash added.

Source(s): Reuters

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