Turkish President Tayyip Erdogan fired three central banking executives on Thursday, two of whom appeared to be opposed to lower interest rates, and improved ways to reduce points and send the lira down for full term.
Investigators saw the move – a midnight announcement in the Official Gazette – as new evidence of a political upheaval by Erdogan, a self-proclaimed enemy of interest that often demands money.
Without commenting on the verdict, Erdogan fired the governors of Semih Tumen and Ugur Namik Kucuk, as well as MPC member Abdullah Yavas, the newspaper reported.
He has elected two new members – Taha Cakmak as deputy and Yusuf Tuna – who are less well known in the central bank or among financial experts, leaving the MPC with little financial experience after being replaced by the president for many years.
Two sources known for internal negotiations said Kucuk and Yavas were fired after a breach of 100 cuts last month, which at the time shocked the economy and sent the money.
On Thursday, the lira weakened by about 1% to 9,900 low compared to the dollar announced before its collapse.
The currency has dropped 19% this year, mainly due to bankruptcy injuries and tensions between investors and investors due to rapid inflation due to inflation which has risen by about 20%.
“The Lira has ceased to be supported by corporations in recent years … and last night’s changes show that the central bank is no longer in control of Turkey’s financial system,” said Arda Tunca, an economist at Eko Factor.
The combination of monetary policy and economic policy has left “Turkey’s economy very fragile,” he added.
Last month, the central bank cut its stakes by 18% while Erdogan – who is on the verge of collapse and is willing to pay off debts and export – was publicly seeking. Many experts say that reducing errors during the recession.
The MPC reshuffle came after the President said Wednesday night that Erdogan had met with Central Bank Governor Sahap Kavcioglu and shared a photo of the two men together.
This marked a change last week when Reuters reported, citing three sources, that Erdogan had lost confidence in Kavcioglu and that the two had not spoken to each other in recent weeks.
Although the MPC has seen a sharp rise in interest rates this year, Kavcioglu has called for a change in recent days, according to sources.
“Kavcioglu has devised a way to quickly reduce prices by the new members,” the man said.
Erdogan named Kavcioglu’s ambassador in March.
Over the past two years, Erdogan has abruptly fired three governors for alleged irregularities, a sign of political interference that has undermined the credibility of the bank.
“Shooting bank officials in the middle of the night without a clear explanation is not the way to build a central bank’s credibility or strengthen market confidence,” one foreign currency broker said Thursday.
Rising prices in Turkey accounted for a two-and-a-half-year rise of 19.58% in September, while the largest share – which Kavcioglu has been pushing for last month – was 16.98%.
Speaking to a parliamentary committee this week, Kavcioglu said the fall in September prices was not surprising and had little to do with the sale of the lira.
The next meeting to establish a bank will be held on October 21, when another interest rate seems possible.
Market trends in the fourth round of transactions also included jumps on traders’ interest rates on Turkish securities in the United States, according to the JPMorgan EMBI Global Diversified index. It reached 521 rocks, the highest point since April, and stopped spreading over Ukraine and Kenya.
A second source told Reuters that both Kucuk and Yavas – who missed the September meeting – opposed the recent banking elections.
Kucuk also criticized the unconstitutional policy in 2019-2020 for using bank deposits to support the lira through the sale of state-owned banks, the man said, adding that Kucuk warned MPC that failure to keep adequate prices now only brings higher prices in the future.
Cakmak, the new vice president, was the deputy chairman of the bank’s governing body at BDDK since 2019. In the past, he had held positions at Ziraat Bank, including the chief of staff.
Tuna, an MPC recruiter, was a professor and a member of the BDDK steering committee from 2003-2009.
“We can only assume that the newly elected members of the central bank’s executive committee will support Kavcioglu and Erdogan’s policies,” said Antje Praefcke, a researcher at Commerzbank. “This is not a surprise to the Turkish lira.”