The Turkish lira currency plunged by more than 10% on March 22 following President Recep Tayyip Erdogan unexpectedly fired Naci Agbal, the country’s central bank governor. Having initially touched a new low of 8.280 a dollar, the lira recovered to close at 7.75 a dollar by 20.00 hours GMT. Incidentally, on the other hand, a day before the lira crashed, bitcoin became the most searched word in Turkey.
Searches for bitcoin spiked by more than 500%.
As Google trends data shows, searches for bitcoin spiked by more than 500% as inflation fears grew following Agbal’s ouster. Before his sacking, the Turkish central bank governor, who favored using higher interest rates to tame inflation, had helped make the lira “one of the best performing emerging market currency this year.” According to a report, satisfied overseas money managers had reacted to Agbal’s policies by pouring funds into the Turkish economy. The crash in the national currency has coincided with the increase in the search for bitcoin in the country.
The new central bank governor is expected to pursue populist policies.
Several money managers have expressed fears the new governor, Sahap Kavcioglu, is expected to pursue populist policies that President Erdogan favors. Yet in his initial comments following his appointment, Kavcioglu, who is the central bank’s fourth chief in less than two years, attempted to calm markets by pledging to maintain the same objectives as those of his predecessor.
The new governor has also pledged “to foster economic stability by lowering borrowing costs and bolstering growth.” Concerned money managers believe these remarks could be a signal that the central bank will in the future “allow the lira to depreciate, and accept elevated inflation levels, to lower interest rates.” At the time of writing, Turkey’s interest rates stand at 19%.