Three well-informed sources said that Turkish President Recep Tayyip Erdogan began to lose confidence in Central Bank Governor Shihab Cavusoglu, and the sources added that the two did not communicate much in the past weeks.
The sources said Erdogan was disappointed by delaying the rate cut until just last month. The presidential office did not respond to requests for comment on Erdogan’s confidence in Cavusoglu.
The president abruptly fired three central bank governors over the past two-and-a-half years due to political disagreements, undermining the lira and severely damaging the credibility and predictability of monetary policy.
Analysts said the sudden interest rate cut last month was further evidence of political interference since Erdogan, who describes himself as an enemy of interest rates, has long sought stimulus measures despite rising inflation. As a result, the lira hit record lows.
The Turkish lira fell 1 percent to a record low against the dollar on Friday, weighed by concerns about the credibility of monetary policy as well as the strength of the dollar.
The lira settled at 8.9650 per dollar at 08:21 GMT, moving away from an all-time low of 8.9750 but lower than Thursday’s close of 8.8800. The Turkish currency has fallen 17 percent against the dollar this year.
Source: Reuters
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