Erdogan Dismisses Two Deputy Ministers as Lira Continues to Devalue

The Turkish currency continues to weaken against the dollar, depreciating by more than 3 percent and surpassing the psychological mark of 15 lira per dollar as the market anticipates a new interest rate cut from the Central Bank. Auction data indicates that the exchange rate started on Monday at the threshold of 14.79 lira per dollar, but by 9:10 AM Moscow time, it had reached an all-time low of 15.29 lira.

Earlier, Forexlive reported that two deputy ministers of finance and treasury were dismissed by President Recep Tayyip Erdogan overnight. Experts link the fall of the Turkish national currency to a new expected decline in the interest rate, which is anticipated on Thursday. Moreover, on Monday, S&P Global Ratings announced a downgrade in Turkey's long-term sovereign credit rating outlook from stable to negative.

The Turkish lira has lost more than half of its value over the past year. The maximum daily decline in the last 20 years occurred on November 23, when the lira dropped by 16 percent following the Central Bank's decision to reduce the benchmark interest rate from 16 percent to 15 percent on November 18. Following that, President Erdogan reiterated his support for further cuts in interest rates, arguing that it would lead to a decrease in inflation.

Since July 2019, Erdogan has changed the head of the Central Bank three times and two finance ministers since November 2021. Previously, leaders of Turkey's main opposition parties have accused Erdogan of economic mismanagement and called for snap elections. The president has rejected these calls, asserting that presidential and parliamentary elections will proceed as scheduled in June 2023.