Bloomberg

Turkey’s Central Bank Chief May Have Little Time to Repair Trust

(Bloomberg) — If the experience of Sahap Kavcioglu’s most recent predecessors is any indication, Turkey’s new central-bank chief has little time left to win back the trust of foreign-exchange traders — or he may lose it forever.In the past three instances when President Recep Tayyip Erdogan replaced the governor, the reaction of the currency markets in the first week of the new incumbent’s tenure set the tone for his entire term. Which is why the lira’s plunge this week — notwithstanding Kavcioglu’s pledge to maintain policy continuity — is so telling.When Murat Cetinkaya was appointed in 2016, he struggled to reverse an erosion of central-bank credibility that led to an early slide in the lira he was never able to reverse. Murat Uysal suffered a similar experience when he took over in 2019. But when Naci Agbal was appointed last November, he managed to reassure markets almost immediately that he was ready to enact the rate increases needed to tackle inflation. The lira rallied more than any other currency that week, and went on to post the world’s best performance during his term.If that pattern is any indication, traders may have already returned their verdict on Kavcioglu, seeing him as an Erdogan loyalist who will quickly ease policy in
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