Turkish lira falls 15% after bank governor removed

Turkey’s currency has fallen as much as 15% after President Recep Tayyip Erdogan sacked the country’s central bank governor over the weekend.

Naci Agbal had been credited as a key force in pulling the lira back from historic lows.

Erdogan replaced him in a surprise move on Saturday, the third central bank governor exit in under two years.

Agbal, appointed in November, had been raising interest rates to fight an inflation rate running above 15%.

The removal has shocked both local and foreign investors who had praised Turkey’s central bank’s recent monetary policy.

The appointment of Sahap Kavcioglu, a former banker and ruling party lawmaker, sparked concerns of a reversal of recent rate hikes.

The fallout from the sacking hit shares on the Istanbul stock exchange, and raised concerns about the impact Turkey’s borrowing costs.

Trading on the exchange was suspended for a period after a sharp fall in share prices triggered automatic circuit breakers.

After dropping sharply, the lira then recovered some ground to stand about 8% lower against the US dollar after Finance Minister Lutfi Elvan said Turkey would stick to free market rules.

In a statement on Sunday, the central bank said it “will continue to use the monetary policy tools effectively in line with its main objective of achieving a permanent fall in inflation”.