China News Service, March 23. According to Reuters, the Turkish lira plunged 15% on the 22nd local time, approaching a record low.
Earlier, Turkish President Recep Tayyip Erdogan removed Abar from the post of central bank governor, indicating that the recent series of interest rate hikes may be reversed.
According to reports, in the early morning of last Saturday (20th), Erdogan appointed Sahap Kavcioglu, who was a bank official and member of the ruling party, as Turkey's new central bank president.
This is the third time that Erdogan has replaced the president of the central bank since mid-2019.
Sources told Reuters that during a 90-minute conference call, Kafcioglu tried to ease concerns about the sharp sell-off and the shift from raising interest rates to lowering interest rates.
He told the bankers’ chief executives that he did not intend to change the policy immediately.
The source pointed out that Kafcioglu said that policy changes will depend on the reduction of inflation, and he made reducing inflation his top priority.
Kafjoglu said in a statement that the central bank of Turkey will “focus on permanently reducing inflation”.
According to reports, for most of the past four years, Turkey's inflation rate has reached double digits.
The Turkish lira plunged from 7.2185 to 8.4850 against the US dollar on the 19th, returning to the level at the beginning of November 2020, when the lowest intraday record was 8.58.
After that, the lira once reported 8.065, still a 10% drop from the 19th.
"The lira has been hit hard. Investors originally expected the real interest rate to be positive to support exchange rate stability. Now they are worried that managers of the lira value don't think so," said Sean Callow, a senior foreign exchange strategist at Westpac Banking Corporation. He added that the lira has not Bottomed out.
"It will be a real test when the deal is enlarged during European time," he said.
The report believes that Erdogan's replacement of Abar was mainly because the Turkish Central Bank raised interest rates two days ago to control the inflation rate close to 16% and the depreciation of the lira.
Goldman Sachs told clients that it is reassessing investment recommendations and predicts that the lira will fall "intermittently" and will start a "pre-type" interest rate cut cycle.