Turkey’s currency fell 9% on Monday, launching it for the biggest single-day sale since 2018, following the abrupt dismissal of the central bank governor last week.
According to FactSet, the lira fell to $ 8,280 from $ 7,219, before regaining ground to trade at about $ 7,9312. Shares in Turkey also fell.
The turmoil comes after President Recep Tayyip Erdogan unexpectedly fired Naci Agbal on Friday, the central bank governor who had repeatedly raised interest rates to try to tame inflation since his appointment in November. Foreign investors say the move renewed concern that the central bank has lost its independence from political influence, diminishing the credibility of policymakers and undermining the appetite for Turkish assets.
New governor Sahap Kavcioglu on Sunday tried to reassure markets by saying that taming inflation is the bank’s main goal. He also pledged to foster economic stability by reducing borrowing costs and boosting growth. Money managers are concerned that it may allow the currency to depreciate and accept high levels of inflation to lower interest rates.
“We’re really trying to measure what the level of commitment to the pound is,” said Simon Harvey, senior market analyst at broker Monex Europe. “We know in Turkey that interest rates are politically sensitive.”