ANKARA – Turkey’s opposition has accused President Tayyip Erdogan of “unprecedented incompetence” for causing a plunge in the value of the Turkish lira by firing the central bank governor for raising interest rates.
Erdogan dismissed Naci Agbal on Saturday, two days after the governor raised rates to curb inflation. Erdogan then appointed a critic of tight policy who is expected to reverse recent rate hikes, fuelling fears of political meddling in monetary policy.
The lira slumped as much as 15% after the move, stocks dived and yields on government debt jumped, piling pressure on the credit-fuelled emerging economy which has been prone to booms and busts during Erdogan’s 18 years in power.
Erdogan has not commented on Agbal’s ouster, but a deputy head of the AKP, Nurettin Canikli, said Agbal had been dismissed because he did not use monetary policy instruments rationally. His replacement, Sahap Kavcioglu, is a former lawmaker from Erdogan’s ruling AK Party (AKP).
“It is truly unprecedented incompetence to cause the Turkish lira to lose more than 10% in a single day, two days after interest rates were raised,” Faik Oztrak, deputy head of the main opposition Republican People’s Party (CHP) told a Monday news conference.
CHP leader Kemal Kilicdaroglu said on Tuesday the government should cut wasteful expenditure, boost fiscal discipline and end interference in institutions such as the central bank, starting by reversing the decision to appoint Kavcioglu.
“(Erdogan) must appoint, if possible from within the central bank, someone as governor who has domestic and international credibility,” he told CHP deputies.
“Turkey has no macroeconomic problems. Turkey has macro-Erdoganic problems,” Iyi Party chairwoman Meral Aksener, head of the fifth largest party in parliament, told her lawmakers.
“Turkey is paying the price for Mr Erdogan’s thoughtless and reckless decisions, with high interest rates, unemployment and high inflation,” she said, calling for a reversal of 2018 changes that concentrated power in the presidency.
“What is the solution? To immediately get rid of this failed system and return to a parliamentary democracy,” she said.