Turkish prime minister, Ahmet Davutoglu, a close ally of President Recep Tayyip Erdogan, will be stepping down soon according to government officials.

Davutoglu’s departure is taking place amid a disagreement between the two men over Mr. Erdogan’s drive for more power.

The two leaders held a late-night summit on Wednesday, and no official statement was issued after it ended. The prime minister, however, is expected to hold a news conference on Thursday after a meeting with officials of the governing Justice and Development Party, or A.K.P.

Under Turkey’s Constitution, the prime minister is the most powerful official, and the president, although he has some genuine powers, is a largely ceremonial figure. But Mr. Erdogan has not been like previous Turkish presidents, and there has been little doubt that he is the country’s pre-eminent political figure. Mr. Davutoglu, who became prime minister in 2014, after Mr. Erdogan was elected president, had long been seen as subservient to Mr. Erdogan.

According to Sinan Ulgen, a former Turkish diplomat and the chairman of the Center for Economics and Foreign Policy Studies, “Even with a person as compliant as Davutoglu, the relationship didn’t work.”

Dollar Up Against Lira

The surprise announcement sent the U.S. dollar spiking against the lira in electronic trade Wednesday afternoon. Political tensions in Ankara have shaken investor confidence in Turkey's $720 billion economy, resulting in the lira tumbling against the greenback to its worst levels since February.

Meanwhile, the iShares MSCI Turkey exchange-traded fund (TUR), was down 8.2% and on track for its worst one-day plunge in nearly five years, according to FactSet data.