Turkish lira plummets after Erdogan fires central bank chief

<p>ANKARA, Turkey &mdash; The Turkish currency plummeted against the U.S. dollar on Monday after President Recep Tayyip Erdogan fired the central bank governor over the weekend for hiking interest rates.</p>
<p>The lira was trading at around 7.8 against the dollar — nearly 9% down from Friday’s close. It had been weaker earlier Monday at 8.4 per dollar.</p>
<p>Erdogan, who advocates keeping interest rates low to tame inflation, unexpectedly fired Naci Agbal with a decree on Saturday just four months after he took office. He replaced Agbal with a banking professor who has argued for lower interest rates.</p>
<p>Agbal was brought in to lead the central bank after the Turkish lira hit record lows and inflation soared. In his months in office, Agbal had hiked the benchmark rate a total of 875 basis points, working to rebuild the credibility of the central bank after it was damaged by years of unorthodox policies.</p>
<p>Agbal’s most recent hike of 200 points on Thursday took the rate to 19%, which was higher than analysts expected. The bank said tight monetary policy would be maintained until inflation, which has hit 15.61% was brought under control.</p>
<p>Erdogan’s decree on Saturday appoints Sahap Kavcioglu as the new central bank head. Kavcioglu is a banking professor and a columnist in a pro-government newspaper where he has argued for low interest rates. He previously was a lawmaker in Erdogan’s ruling party. </p>
<p>Kavcioglu is the fourth governor to lead the bank in two years.</p>