The news of the Turkish President firing the Central Bank Chief sent the Turkish Lira on a downward spiral until it hit a 15% low. President Erdogan had fired Naci Ağbal for hiking the interests rates by 200 basis points to combat inflation.
His decision to replace Naci Ağbal with Sahap Kavcioglu, however, did not have the much-desired effect as the Lira dropped to 8.4850 from its initial trading point of 7.2185 against the dollar.
Kavcioglu however pledged to use monetary policy tools to deliver more permanent solutions for price stability. He also, like the president holds the belief that increasing the interests rate would indirectly increase inflation.
The price drop, closest to its all-time lowest may according to industry experts increase inflationary concerns and negatively affect the nation’s position as the country with the highest economy in emerging markets.