Turkish lira at new lows after Erdogan fires bank officials

ANKARA, Turkey — The Turkish lira hit new record lows against the dollar on Thursday after President Recep Tayyip Erdogan fired senior central bank officials, heightening concerns over the Turkish leader’s interference in the bank’s activities.

Erdogan dismissed deputy central bank governors Semih Tumen and Ugur Namik Kucuk as well as Abdullah Yavas, a member of the bank’s monetary policy committee, according to the Official Gazette. He appointed Taha Cakmak as a deputy governor and Yusuf Tuna as a member of the monetary policy committee.

Turkish media reports said Kucuk had opposed the bank’s decision last month to cut the main interest rate by one percentage point, bowing to Erdogan’s demand for lower borrowing rates to boost growth.

Economists generally view higher interest rates as a curb on inflation but the Turkish president has repeatedly said the opposite — that a high rate of interest causes price rises.

The lira weakened by 1% overnight to reach 9.19 against the dollar. It was trading at 9.14 against the dollar early on Thursday. The lira has lost some 19% of its value since the start of the year.

The shakeup of the bank officials came hours after Erdogan met with the bank’s governor, Sahap Kavcioglu.

Kavcioglu is the fourth appointee to the role since 2019 amid concerns over the bank’s independence. He had kept the interest rate at 19% since taking office in March. Erdogan called for a cut in rates in August.

The Turkish economy never fully recovered from a 2018 currency crisis when it was hit by the coronavirus pandemic, causing growing inflation and unemployment.