Istanbul / NinaThe Turkish lira continued its devaluation against hard currencies for the tenth day in a row, reaching today, Monday, 927 liras for every 100 US dollars. All the decisions taken in emergency situations did not work, as a number of central bank officials and economic policies were dismissed, others were appointed to replace them, and the interest rate on cash deposits was reduced.
Turkish President Recep Tayyip Erdogan issued orders to dismiss 3 members of the Monetary Policy Committee of the Central Bank, and appointed Taha Çekmek as Deputy Governor of the Central Bank, and Yusuf Tuna as a member of the Monetary Policy Committee.
Economists believe, according to analyzes published by Turkish newspapers, that these decisions came within the steps of reforming the Monetary Policy Committee after Erdogan’s meeting with Central Bank Governor Shihab Kavcioglu.
They pointed out that this policy appeared more clearly after Erdogan appointed Shehab Kavcioglu as the new governor of the Central Bank, last March, in a change that is the fourth of its kind in less than two years, especially after the series of dismissals that affected the old governors, namely Naji Aghbal and Murat Uysal. , and Murat Tishtin Qaya.
One of the most important reasons that led to the dismissal of these officials is the disagreement between the president’s vision of refusing to raise the interest rate in order to reduce inflation rates, and the view of the two articles supporting raising the interest rate in order to raise the value of the lira.
They explained that the bank’s lack of independence in its financial and financing decisions in accordance with the amendments to the constitution in April 2017, which allowed the president to intervene, gave way to a dispute between the president and officials in the central bank that eventually leads to dismissals.
They pointed out that the conflict between the two parties leads to rapid fluctuations in the prices of hard currencies, gold and silver, noting that banks always return their assets to the US Central Bank, which is a weak point for emerging economies, including Turkey.
The exchange rate of the lira has remained during the past six months, ranging between 8.4 and 8.5 liras per dollar, but since late September until now, its decline has broken the 9 lira barrier against the dollar due to several developments.
The Turkish lira lost about 18 percent of its value against the dollar in 2021, exacerbating an increase in inflation to about 20 percent, while economists said the reason for the lira’s decline was due to the central bank’s cut in the interest rate by 100 basis points to 18 percent last month.
The Turkish Central Bank also announced a one-week reduction in the interest rate on repo. From 19 percent to 18 percent, the bank said that the Public Policy Committee had taken the decision to reduce the interest rate from 19 percent to 18 percent. Based on the need to update the monetary policy stance to counter inflation.
In this context, sources said that the lira is facing continuous pressure, following the dismissals of the Central Bank, which prevented it from reviving due to the fall of the dollar.
The sources said that Turkish President Recep Tayyip Erdogan dismissed three members of the Monetary Policy Committee of the Central Bank, which pushed the local currency to a new record low, at the limits of 9.19 lira against the dollar.
While the dollar reached its lowest level against other major currencies in ten days, retreating from the gains it made recently.
The dollar recorded its second largest drop in two days since the beginning of the year, even after the release of the minutes of the Federal Reserve’s meeting held in September, which confirmed that it is likely to start reducing stimulus this year.
Analysts explained that the dollar’s decline has revived many currencies, except for the Turkish lira, as it is facing troubles following the dismissal of the two deputy governors of the Bank, Semih Toman and Ugur Namek, as well as a member of the Monetary Policy Committee, Abdullah Yaffa./End
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