Was Naci Agbal fired over “missing FX reserves”?

Opposition DEVA leader Ali Babacan has said there are rumors that former central bank governor Naci Agbal was sacked at the weekend for investigating how the bank burned through $130 billion in forex exchange reserves during former finance minister Berat Albayrak’s tenure. “We do not know if this is false or true, but I would not be surprised if that was the case,” Babacan said on March 22.  Yet, a presidential advisor, Mr Nurettin Canikli claims Agbal was let go, because he raised interest rates too much.  Other sources claim Agbal and President Erdogan had zero contact over the last two months.


Turkey is becoming a boiling cauldron of rumors about Naci Agbal’s sacking, which is turning against Erdogan’s attempts to carefully control the national debate. Erdogan would rather have the media debate tomorrow’s AKP Grand Convention, where he will make a 2 hour speech, outlining a new vision.  However, the media is more interested in the FX reserves of Turkey’s Central Bank during former economy czar Berat Albayrak2s tenure and whether he will stage a comeback after the Grand Convention.



Turkish people are extremely sensitive to currency news, which means the current debate has the potential to turn public opinion against Erdogan and Albayrak.


Democracy and Progress Party (DEVA) leader and former economy minister Ali Babacan has said there are rumors suggesting that President Recep Tayyip Erdogan has fired Naci Agbal from his position, after the former central bank governor started to question where the $130 billion in foreign exchange reserves had gone.


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“They wasted away the central bank’s 130 billion dollars. The central bank governor who was dismissed from his position at midnight has reportedly asked ‘Where did the 130 billion dollars go?’ There is a rumor that he was discharged from his position because of this reason. We do not know if this is false or true, but I would not be surprised if that was the case,” Babacan said on March 22, while addressing a DEVA congress in Istanbul.



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Costly market interventions prevailed under former finance minister Berat Albayrak, Erdogan’s son-in-law, who resigned the day after Agbal was appointed in November.


State-owned banks have sold some $130 billion to stabilize the lira in the last two years, supported by swaps from the central bank. As a result, the central bank’s foreign currency fell by three-quarters last year, to a mere $11 billion.


“They said, ‘We will lower both the interest rate and inflation,’ but they have increased both of them. Both the interest rate and inflation are now at double-digit levels. This country nor its people are one’s guinea pig,” Babacan said.


He said that he last week urged Erdogan to “either apologize to people or take an action with regards to the central bank.”


Reuters reports that Mr Nurettin Canikli claimed that central bank chief was irrational with policy.

A deputy head of Turkey’s ruling AK Party said on Monday former central bank governor Naci Agbal was sacked at the weekend for not using monetary policy tools rationally, offering the first explanation by President Tayyip Erdogan’s government.


Erdogan replaced Agbal, a hawk, with a critic of high rates, sparking a sharp selloff in the lira. The announcement of Agbal’s dismissal did not give any reasons for the move.


“The government changing a Central Bank governor whom it thought did not use monetary policy instruments rationally…and thus brought a big financial burden to the economy, is not defiance of the markets,” AKP deputy head Nurettin Canikli said.


The removal came after the central bank hiked the main one-week repo rate by a more than expected 200 basis points to 19%.


“The market expectation determines the positive real interest rate limit. Going over the market expectation bring additional burden to the economy and lifts inflation expectations,” Canikli also said on Twitter.


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Published By: Atilla Yeşilada

GlobalSource Partners’ Turkey Country Analyst Atilla Yesilada is the country’s leading political analyst and commentator. He is known throughout the finance and political science world for his thorough and outspoken coverage of Turkey’s political and financial developments. In addition to his extensive writing schedule, he is often called upon to provide his political expertise on major radio and television channels. Based in Istanbul, Atilla is co-founder of the information platform Istanbul Analytics and is one of GlobalSource’s local partners in Turkey. In addition to his consulting work and speaking engagements throughout the US, Europe and the Middle East, he writes regular columns for Turkey’s leading financial websites VATAN and www.paraanaliz.com and has contributed to the financial daily Referans and the liberal daily Radikal.