Erdogan’s Ousting Of Governor Cetinkaya Pummels Lira

The Turkish Lira nosedived against the U.S. dollar on Monday, as Turkey’s President Recep Tayyip Erdogan has fired the Governor of the central bank following his refusal to cut interest rates to help stimulate economic growth.

The Lira reached as low as 5.7849 against the greenback, falling around 2.9 percent from last week’s closing quote of 5.6228. Should the Turkish falls further, 6.5 is likely seen as its next support level.

So far this year, the currency had lost around 12.3 percent of its value against the dollar.

Governor Murat Cetinkaya, who has seen serving since April 2016, was dismissed on Saturday without giving reason for the move. Erdogan has repeatedly criticized Cetinkaya for high interest rates and called to lower interest rates to stem inflation.

The benchmark interest rate has been on hold at 24 percent since last September to support the plunge in the lira currency.

Cetinkaya’s dismissal sparked worries about central bank independence, which is vital for a stable economy.

Cetinkaya was replaced by Deputy Governor Murat Uysal, who is known as a dovish member of the bank’s interest rate setters.

In a statement on Saturday, the central bank said that it would “continue to independently implement monetary policy instruments.”

Uysal stated that the Bank’s communication channels would be utilized at the maximum level in order to achieve the price and financial stability goals.

The central bank’s monetary policy meeting is due on June 25, with economists widely expecting a rate cut to shore up the economy.

Bitcoin is trading at $10,700 for the first time in over a year

  • The price of a single bitcoin exceeded $10,000 for the first time since March 2018 on Friday, according to CoinDesk.
  • The milestone followed Facebook’s June 18 announcement that it will introduce a digital currency, Libra, and an app, Calibra, that will allow users to send and receive the currency and use it to make purchases online.
  • Bitcoin’s price has experienced significant volatility during the past two years, rising to nearly $20,000 in December 2017 before falling to around $3,200 a year later.

The price of a single bitcoin exceeded $10,000 for the first time since March 2018 on Friday, according to Marketsforu

The milestone followed Facebook’s June 18 announcement that it will introduce a digital currency, Libra, and an app, Calibra, that will allow users to send and receive the currency and use it to make purchases online. Facebook’s announcement came four months after JPMorgan became the first major US bank to create a digital currency

Both moves were striking due to the significant roles the companies play in the technology and finance industries and the heated debate about the long-term prospects of bitcoin and other digital currencies.

Aside from those announcements, bitcoin has experienced strong 2019 growth despite its epic fall in 2018. It’s experienced over 150% growth this year. That number far exceeds the growth of the S&P 500, gold, and US oil, which have reportedly all seen less that 20% growth, according to The Wall Street Journal.

Of course, an outsized rise is also what precipitated the bitcoin crash last year.

JPMorgan CEO Jamie Dimon said in September 2017 that bitcoin was a fraud and that he would fire employees who traded it. Four months later, he said he regretted those comments. Famed investor and Berkshire Hathaway CEO Warren Buffett has compared bitcoin to rat poison, while Twitter CEO Jack Dorsey has expressed enthusiasm for the digital currency.

Bitcoin’s price has experienced significant volatility during the past two years. It rose to nearly $20,000 in December 2017 before falling to around $3,200 a year later. 

Commodity, Currency Markets

Crude oil futures are rising $0.45 to $57.52 a barrel after spiking $3.10 to $57.13 a barrel on Thursday. Meanwhile, after skyrocketing $48.10 to $1,396.90 an ounce in the previous session, gold futures are edging up $0.80 to $1,397.70 an ounce.

On the currency front, the U.S. dollar is trading at 107.44 yen versus the 107.27 yen it fetched at the close of New York trading on Thursday. Against the euro, the dollar is valued at $1.1318 compared to yesterday’s $1.1293.