Central bank chief might have been sacked over inquiry into 130-billion-dollar loss in FX reserves, says Babacan

Opposition DEVA leader Ali Babacan has said there are rumors that former central bank governor Naci Ağbal 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.

This file photo shows DEVA leader Ali Babacan addressing a party meeting.

Duvar English

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

“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.

Costly market interventions prevailed under former finance minister Berat Albayrak, Erdoğan’s son-in-law, who resigned the day after Ağbal 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 Erdoğan to “either apologize to people or take an action with regards to the central bank.” “We have just presented him with two options and he again chose the wrong one,” Babacan said.

Turkey's lira plunged to a near record low on March 22 following a shock central bank shake up, while other emerging market currencies pared declines as the dollar gave up early gains on the back of a dip in bond yields.

The lira tumbled as much as 15% to 8.4850 versus the dollar - near November's record low of 8.58 - after the appointment of Şahap Kavcıoğlu as central bank governor sparked fears of a reversal of recent rate hikes.