Turkish assets came under fire after President Recep Tayyip Erdogan dismissed the central bank governor, fueling concern that monetary policy will be eased too quickly. Yet with rate-cuts already priced in and local bonds offering high yields, the fallout has been relatively contained.
The currency was trading 1.8% weaker against the dollar, tracing back almost half the plunge posted earlier in the day. Its implied volatility, which was already the highest in the world, rose the most since early May. Istanbul’s main stock index suffered its biggest drop in almost a month on a closing basis.