On November 7, 2020, Turkey’s President ERDOGAN fired the central bank governor Murat UYSAL and removed him with Naci AGBAL former finance minister. Naci AGBAL had been financed minister from 2015 until 2018 when he was appointed to head the directorate of presidential strategy and budget.
The decision was made by a presidential decree which was announced in Turkey’s Official Gazette with no immediate reason given for the sacking. The UYSAL’s replacement came after just 16 months in this position.
The lira currency hit record lows, losing 30 % of its value since the start of the year.
UYSAL took on the role after a dispute between ERDOGAN and the previous governor, Murat CETINKAYA, over cutting interest rates.
ERDOGAN has long opposed high rates. Last Saturday, he said Turkey was fighting against a “devil’s triangle of Turkey lira interest rates, exchange rates, and inflation”.
Analysts said that while AGBAL is a close EEDOGAN ally, he is seen as a capable manager who could take a more orthodox approach to policy. That could calm concerns that have driven Turks to snap up hard currencies at record levels.
Timothy ASH at BlueBay Asset Management said on Twitter: “UYSAL’s leadership had been utterly disastrous. AGBAL cannot be worse, surely. He had a reputation as a decent technocrat”.
The lira closed at 8.5445 against the dollar on Friday after touching a record low of 8.58, despite dollar weakness as votes were still being counted in the U.S. election.
Turkey is a G20 country and has the largest economy in the Middle East.
Erik MEYERSSON, a senior economist at Handelsbank, said that while UYSAL had taken the blame for Turkey’s economic woes, it was Erdogan who was “tying” the bank’s hands, adding that the post of central bank governor was “mere puppetry”.
Opposition parties criticized the move, saying it would strengthen Erdogan’s influence and politicize the bank.
Tahsin TARHAN, a lawmaker with the main opposition Republican People’s Party said: “All we were missing was a party-tied central bank, and we got it. The central bank is now the AKP’s”.
Umit OZLALE, chair of development policies at the opposition Iyi Party, said the government was putting “expiration dates” on all bureaucrats to “cover up their own sins”.
Turkey’s Milliyet newspaper reported on Thursday that finance minister Berat ALBAYRAK had ruled out intervening to support the lira, reiterating government concerns that rising interest rates could hurt the economy.
This article was edited using the data from Aljazeera.com, Bloombergquint.com, Dw.com, and Business-standard.com