Turkish lira sinks after reports that a key central bank member could resign

Ismail Ferdous | Bloomberg | Getty Images

Pedestrians pass a giant Turkish national flag hanging above a DenizBank AS bank branch in Istanbul, Turkey, on Tuesday, July 19, 2016. Turkey’s central bank slowed the pace of interest rate cuts at its meeting on Tuesday after the failed coup attempt triggered a sell-off in the currency and sovereign debt. 

The Turkish lira saw heavy selling again Thursday afternoon, amid a broader sell-off for emerging markets and after a report of a possible resignation at the country’s central bank.

The U.S. dollar was up over 4 percent on Thursday against the Turkish currency, trading at 6.7422 by 1:00 p.m. London time. The lira has already seen a roughly 40 percent depreciation against the greenback since the beginning of the year.

Thursday’s losses were accentuated by a Reuters report, that cited two sources familiar with the matter, stating that the Turkish central bank’s deputy governor and Monetary Policy Committee member Erkan Kilimci is set to resign. The Development Bank of Turkey released a document on Thursday showing Kilimci had joined its board, Reuters reported.

The central bank was not immediately available for comment when contacted by CNBC.

Turkish President Recep Tayyip Erdogan has long pressured the central bank against monetary tightening, calling himself “the enemy of interest rates” as he prioritized rapid growth over tempering runaway inflation, currently at more than 15 percent. This led the lira to spiral over time, as investors lost faith in the country’s fiscal discipline.