Sources: Erdogan loses confidence in the governor of the central bank and reads it drops

Three knowledgeable sources said Turkish President Recep Tayyip Erdogan has started to lose faith in Central Bank Governor Shihab Cavusoglu, and the sources added that the two had not communicated much in recent weeks.

The sources said Erdogan was disappointed to delay the rate cut until last month. The presidential office did not respond to requests for comment on Erdogan’s confidence in Cavusoglu.

The president brutally fired three central bank governors over the past two and a half years over political disagreements, undermining the lira and seriously damaging the credibility and predictability of monetary policy.

Analysts said the sudden drop in interest rates last month was further evidence of political interference as Erdogan, who describes himself as an enemy of interest rates, has long sought stimulus despite the hike in inflation. As a result, the lira has reached record levels.

The Turkish lira fell 1% to a record low against the dollar on Friday, amid concerns about the reliability of monetary policy as well as the strength of the dollar.

The lira stood at 8.9650 per dollar at 08:21 GMT, moving away from an all-time low of 8.9750 but below Thursday’s close of 8.8800. The Turkish currency has fallen 17% against the dollar this year.

Source: Reuters