Turkey's lira briefly fell 15% to near its all-time low on Monday after President Tayyip Erdogan's shock weekend ousting of a hawkish central bank governor sparked fears of a reversal of recent rate hikes.
Sahap Kavcioglu, a former banker and ruling party lawmaker who shares Erdogan's unorthodox view that high interest rates can fuel inflation, was the third central bank chief abruptly installed by the president since mid-2019.
Kavcioglu had sought to ease investors' concerns about a sharp pivot from tight to expansive monetary policy, telling bank CEOs on Sunday that he planned no immediate policy change, a source told Reuters.
Nurettin Canikli, a deputy head of Erdogan's ruling AK Party, said that "the government changing a Central Bank governor who it thought did not use monetary policy instruments rationally, ... and thus brought a big financial burden to the economy, is not defiance of the markets".
The dismissal of Naci Agbal reaffirmed the political control that has for years harmed foreign investors' view of what is a major emerging economy.