Following the sudden ouster of the central-bank governor last week, Turkey’s currency fell nearly 8% on Monday, setting the course for its biggest single-day selloff since 2018.
According to Factset, the lira touched a low of 2 8,280 compared to 2 7,219. Turkish stock also sank.
The uproar erupted after Central Bank Governor Nassi Agbal was unexpectedly fired by President Recep Tayyip Erdogan on Friday for repeatedly raising interest rates in an attempt to curb inflation since his appointment in November. Foreign investors say the move raises concerns that the central bank has lost independence from political influence, the credibility of policymakers and Turkey’s appetite for wealth.
The new governor, Sahap Kavasioglu, on Sunday sought to reassure markets that hitting inflation is the bank’s main objective. He also promised to promote economic stability by reducing borrowing costs and accelerating growth. Money managers worry that it may devalue the currency, and accept the level of inflation, lowering interest rates.
“We will really estimate the level of commitment to the lira,” said Simon Harvey, a senior foreign-exchange market analyst at broker Monex Europe. “We in Turkey know that interest rates are politically sensitive.”