Shooting the messenger, once again: some thoughts

TURKEY - In Brief 07 Nov 2020 by Murat Ucer

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President Erdogan removed the CBRT Governor Murat Uysal today, replacing him with former Finance Minister Naci Agbal (2015-18), who has been heading the Budget and Strategy Office at the Presidency.There are basically two theories regarding what might have triggered the President’s decision. The first theory runs something like this: Governor Uysal finally advocated a bold (probably an emergency) hike, especially in the light of --at the time very likely and now definitive-- Biden win. Uysal, being close to the tranches, advocated the move as the only way of stabilizing the TL – at least in the short term.A second theory has it that President found Governor Uysal “unsuccessful”, because he is very unhappy with the lira weakness, and hence, brought someone closer to himself – incidentally, one of the very few left – to do basically whatever it takes to stabilize the lira, including an emergency rate hike.At the moment, I feel the first theory is by far a lot more likely. The argument that the President should find the Governor unsuccessful is absurd in my view, because, needless to say, Uysal did all he can to implement Mr. Erdogan’s theories in the first place, with disastrous consequences, as he tried to deal with the “Devil’s Triangle” (of exchange rates, interest rates and inflation), which the President himself referred to lately with dismay.I think, like most others, that Mr. Agbal is a decent technocrat, with a reasonable degree of credibility in the eyes of the investors from his finance ministry days. But to conclude from here that Mr. Agbal now has a free hand to do whatever is needed – as a statement in this Reuters article by an official seems to imply (“He ...