Turkish Lira Crashes after Central Bank Head Sacked

The Turkish Lira fell nearly 15% on 22 March 2021, Monday, after the nation's president sacked the head of the Central Bank, Naci Agbal, because he raised interest rates to 19% from 17%, which boosted the currency, but contradicted President Erdogan's belief that higher interest rates raise inflation.

The exchange rate from Turkish Lira to U.S. Dollar (TRY/USD), which averages 7.6:1 for the last 180 days, fell from 7.2:1 to 8.4:1 at a certain point on March 22. The fallout also affected shares on the Istanbul stock exchange. A sharp fall in share prices triggered automatic circuit breakers, and trading on the exchange was suspended for a while as a result.    

TRY Crashes Twice Within Half a Year

It was not the first time that TRY crashed in the recent half a year. Last October, the Turkish economy was hit by both coronavirus and friction with Nato allies, which sparked broad anxiety among investors. According to the data from Exchange Rates, a UK currency site, the Turkish Lira continued to fell to a 5-year lowest level of 8.52 to $1 on 7 November 2020, after it firstly surpassed the 8 mark to reach 8.19 on October 27.

Source: Exchangerates.org.uk