by Leo Kendrick
After passing the 9.1 milestone on Monday, the Turkish Lira’s value against the United States Dollar continued to plummet early Thursday, reaching a record 9.19 against the greenback. This drop followed a meeting late Wednesday between President Recep Tayyip Erdoğan and Central Bank governor Şahap Kavcıoğlu. A decision to fire several senior members of the Central Bank management was announced Thursday morning.
Dr Semih Tümen and Dr Uğur Namık Küçük, both deputy governors, as well as Monetary Policy Committee member Abdullah Yavaş, were all relieved from their duties early Thursday by President Erdoğan. In their places, Taha Çakmak and Yusuf Tuna were appointed.
Personnel changes and firings have become routine in Turkey’s Central Bank in recent years as the Lira continues to struggle with constant devaluation. The Central Bank’s current governor Şahap Kavcıoğlu was appointed in March following the dismissal of Naci Ağbal, who had instituted interest rate hikes in late 2020, a decision President Erdoğan disagreed with. Kavcıoğlu is the fourth new governor the president has appointed since 2019.
At a meeting several weeks ago on September 23, the Central Bank’s monetary policy committee made the decision to lower interest rates from 19% to 18%. Following this decision, the Lira’s value against the Dollar dropped, going from 8.64 to 8.80. Governor Kavcıoğlu has been under public pressure from President Erdoğan to keep interest rates down. At an announcement in June, the president told a large audience to expect a drop in interest rates after August.
With this week’s developments, the Turkish Lira has now lost 20% of its value since the beginning of the year.