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Business News

After firing Turkey's cenbank chief, Erdogan also removes deputy

ISTANBUL (Reuters) -President Tayyip Erdogan removed a central bank deputy governor, Murat Cetinkaya, from his post on Tuesday, 10 days after he fired the bank’s hawkish governor in a shock move that sent the lira down some 13%.

FILE PHOTO: A logo of Turkey's Central Bank (TCMB) is pictured at the entrance of the bank's headquarters in Ankara, Turkey April 19, 2015. REUTERS/Umit Bektas/File Photo

Banker Mustafa Duman was appointed to the post, according to the Official Gazette. He has held executive positions at Morgan Stanley Securities and also had treasury, risk and auditing jobs in the financial sector, the central bank said.

The decree gave no reason for the change. Cetinkaya, a former CEO of the Istanbul stock exchange, had served since mid-2019 at the central bank, which has seen rapid turnover in its upper ranks including four governors in two years.

The lira weakened in response and touched 8.4510 against the U.S. dollar. It firmed after Governor Sahap Kavcioglu pledged tight policy and stood at 8.3190 at 1440 GMT.

Separately, Omer Duman, a member of the bank’s board, was replaced during the annual general assembly held on Tuesday. He was replaced by Ertan Aydin, who was nominated by the Treasury.

Duman was also a member of the policy-making committee but his replacement was not yet named.

On March 20, Erdogan ousted Naci Agbal, an orthodox governor who hiked the key interest rate to 19% to address double-digit inflation. Sahap Kavcioglu, who has supported the president’s view that high rates cause inflation, was named the new chief.

The move led to market turmoil amid concerns Turkey may return to unorthodox economic policies and rapid rate cuts. Inflation stood at 15.6% in February.

Deutsche Bank estimated foreigners dumped between $750 million and $1 billion of Turkish equities last week, in addition to $500 to $750 million in local bonds.

In an interview with Bloomberg, new Central Bank Governor Sahap Kavcioglu dismissed “prejudiced” expectations of an early rate cut in April or the following months.

Responding to speculation that Turkey could impose capital controls to protect its currency, Erdogan’s chief economic adviser, however, told Reuters it was not considering them.

Reporting by Ezgi Erkoyun, Can Sezer and Ali Kucukgocmen; Editing by Jacqueline Wong and Jonathan Spicer

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