July 7, 2019 / 7:28 PM / 2 months ago

UPDATE 1-Turkish lira weakens to 5.8125 after cenbank governor dismissed

(Adds background, details)

ANKARA, July 7 (Reuters) - The Turkish lira weakened to 5.8125 against the U.S. dollar on Sunday evening from 5.6345 in the last U.S. trade on Friday, after President Tayyip Erdogan dismissed the central bank governor early on Saturday.

Governor Murat Cetinkaya, whose four-year term was due to run until 2020, was replaced by his deputy Murat Uysal, a presidential decree published early on Saturday in the official gazette showed.

It was the first reaction after the dismissal in early trading in Asia, as markets opened for the first time since Cetinkaya’s dismissal.

Erdogan sacked the central bank governor for refusing the government’s repeated demands for rate cuts, Hurriyet newspaper on Sunday quoted Erdogan as telling a meeting with his party’s lawmakers.

No official reason was given for the sacking, but government sources cited Erdogan’s frustration that the bank has kept its benchmark interest rate at 24% since last September to support the ailing lira currency.

In a written statement on Saturday, Uysal said he would independently implement monetary policy instruments focused on achieving and maintaining the primary objective of price stability.

Despite the new governor’s assurance, critics say the move once again showed that Erdogan was in full control of monetary policy, and that Turkey would witness a period of rapid rate cuts. (Reporting by Ece Toksabay, Editing by Alexandra Hudson, Editing by William Maclean)

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