The Turkish lira currency plunged by more than 10% on March 22 after the country’s President Recep Tayyip Erdogan unexpectedly fired Naci Agbal, the country’s central bank governor. Having initially touched a new low of 8.280 a dollar, the lira recovered to close at 7.75 a dollar by 20.00 hours GMT.
On the other hand, a day before the lira crashed, bitcoin became the most searched word in Turkey. As Google trends data shows, searches for bitcoin spiked by more than 500% as inflation fears grew following Agbal’s ouster.
Before his sacking, Agbal, who favored using higher interest rates to tame inflation, had helped make the lira “one of the best performing emerging market currency this year.” According to a report, satisfied overseas money managers had reacted to Agbal’s policies by pouring funds into the Turkish economy. The report said:
Overseas money managers had added a net of $4.6 billion to Turkish stocks and local currency bonds during Agbal’s tenure, betting that higher interest rates would help limit inflation and stabilize the lira.
However, some money managers have expressed fears the new governor, Sahap Kavcioglu will pursue populist policies that are favored by President Erdogan. Yet in his initial comments following his appointment, Kavcioglu, who is the central bank’s fourth chief in less than two years, attempted to calm markets by pledging to maintain the same objectives as those of his predecessor.