A sell-off in the Turkish lira this week, sparked by President Recep Tayyip Erdoğan’s replacement of the governor of the central bank, was probably overdone, said Mark Mobius, founder of emerging market investment company Mobius Capital Partners.
The lira should retain its value going forward, Mobius said in an interview with Bloomberg Television on Wednesday.
“I think it did not make sense to have this kind of reaction, but it was expected – whenever you have this kind of change, the currency will get weaker,” Mobius said, referring to the new leadership at the central bank, which Erdoğan implemented at the weekend.
“I don’t think the lira will continue with this weakness, I think it will be steady going forward,” he said.
New central bank governor Şahap Kavcıoğlu has stated that he wants a stable currency, Mobius said.
Turkey’s lira slumped by as much as 15 percent to 8.38 per dollar early on Monday, nearing a record low of 8.58 per dollar reached at the start of November. It closed the day down 8.4 percent. On Thursday morning, it was trading little changed at 7.91 per dollar.
Erdoğan sacked central bank governor Naci Ağbal after he raised interest rates last week for a third time in five months to steady the lira and rein in inflation. Kavcıoğlu, a former banker and parliamentarian for Erdoğan’s ruling party, had criticised high interest rates in Turkey before his appointment in a column for a pro-government newspaper.
Mobius said his company continually monitors possible weakness in emerging market currencies and invests accordingly. In Turkey, for instance, Mobius Capital Partners has invested in a software company that sells its products abroad, he said.