Senior central bank executive resigns as Turkish lira plunges to 13 against dollar

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Doruk Küçüksaraç, who has served as director of the markets department for the Turkish Central Bank since August 2019, resigned on Tuesday after the Turkish lira plunged to 13 against the US dollar, according to local media reports.

Küçüksaraç was replaced by Hakan Er, an assistant general manager at the bank.

The development comes after President Recep Tayyip Erdoğan on October 10 dismissed by way of a midnight decree former central bank deputy governors Semih Tümen and Uğur Namık Küçük, in addition to Abdullah Yavaş, who had been a member of the bank’s Monetary Policy Committee since 2008.

Taha Çakmak was appointed as a deputy governor, and Yavaş was replaced by Yusuf Tuna.

Before the current central bank governor Şahap Kavcıoğlu was installed, a market-friendly governor had raised rates sharply during his four-month time in office.

Party loyalist Kavcıoğlu, however, has slashed rates from 19 percent since the start of September, despite the runaway price rises, and in line with the president’s unorthodox belief that high interest rates cause high inflation, which has attracted widespread criticism.

The embattled Turkish lira crashed last week and has continued to lose value against the dollar after a series of rate cuts by the central bank in spite of rampant inflation.

“I have never advocated, do not advocate and will never advocate for increasing interest rates,” Erdoğan told Turkish journalists on board his plane returning from a trip to Turkmenistan on the weekend.

“Even if others who think differently appear, Tayyip Erdoğan has the same position. I will absolutely not compromise on this issue,” he said, as quoted by NTV.

The Turkish currency, which weakened to a record low of 13.49 against the US dollar last week, before recovering to around 12.45, again plunged to over 13 on Tuesday, following Erdoğan’s successive remarks defending the recent sharp cuts in interest rates by the central bank.

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