After Erdogan wins another five years in office, the Turkish Lira declines

Erdogan's Victory and Impact on Turkish Lira

Erdogan's Victory and Impact on Turkish Lira

Recep Tayyip Erdogan became the country's longest-serving president after winning the presidential runoff election on Sunday, which caused the lira to decline. Investors are now watching for any indications that he will begin to loosen the state's strict control over the markets.

As of 6:40 a.m. in Istanbul, the lira was trading at 20.01 per US dollar after falling as much as 0.3% to 20.03, which was close to a record low. Wall Street anticipates further lira weakness, with Morgan Stanley expressing concern that, should Erdogan continue his policy of maintaining low interest rates, the lira may reach 26 per dollar earlier than initially anticipated and decline toward 28 by the end of the year.

By the end of the quarter, the currency is anticipated to reach 23 by Wells Fargo & Co. Erdogan's victory would not bring any solace to foreign investors, according to Hasnain Malik, a strategist at Tellimer in Dubai. "A painful crisis affecting all assets could be on the horizon with very high inflation, very low interest rates, and no net foreign reserves," the report stated.

With 52% of the vote in the unofficial count, Erdogan easily won the second round. Shortly after 8 p.m. on Sunday, he was giving a victory speech in Istanbul from the top of a bus.

Author : Prop Connect
Publish Date : 29 May 2023

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