Lira Tumbles After Erdogan Replaces CBRT Head

The lira plunged at the start to the week after Pres Erdogan fired CBRT chief Agbal and replaced him with a like-minded economist Sahap Kavcioglu, who shares the President's controversial views on monetary policy. Spot USD/TRY wiped out four months worth of losses in one swing, printing levels not seen since Agbal took the helm of the CBRT in early Nov 2020.

• Agbal's ouster came on the back of a larger than expected rate hike delivered by Turkey's central bank last Thursday. Click here to see our flash analysis of Erdogan's move.
• CBRT upheaval coincided with Turkey's decision to quit the Istanbul Convention, a treaty preventing violence against women, which put further strain on Astana's relations with the U.S. & EU.
• Spot USD/TRY surged to TRY8.4707 early on and BBG cited an FX trader as noting that "a rush to sell the currency in thin liquidity (...) overwhelmed support for the lira from state banks."
• The rate has pulled back from highs and last trades at TRY8.1530, ~9350 pips higher on the day. Renewed purchases could allow the pair to attack TRY8.5793, an all-time high printed on Nov 6 & the key bullish target. Conversely, bears look for a continued retreat under the psychological TRY8.0000 level.
• Turkish data releases this week include unemployment (today), consumer confidence (Wednesday) and real sector confidence (Friday).