TURKISH BANKS PREPARE FOR TURBULENCE AHEAD

摘要

Turkey's economy was thrown into uncertainty in late March when president Recep Tayyip Erdogan abruptly fired the governor of the central bank, Naci Agbal, just four months into the job. Mr Agbal had been praised for engineering a strong rebound in the lira and efforts to tame double-digit inflation, which included a larger-than-expected rate hike just days before he was sacked. In total, Mr Agbal had raised interest rates from 10.25% to 19%. In the aftermath of his dismissal, the lira fell 14% against the dollar, with a strong sell-off among Turkey's asset markets. Mr Agbal was quickly replaced with Sahap Kavcioglu, a relatively unknown university professor who has previously served as a lawmaker from Mr Erdogan's ruling Justice and Development Party, and also as a deputy manager at state-owned lender Halkbank. Following the move, research consultancy Capital Economics predicted a 200 basis point interest rate cut in the short term, as well as further aggressive easing in the second half of 2021.