People walk next to a Turkish national flag at the historic grand bazaar in Istanbul.
Ozan Kose | AFP | beautiful pictures
The Turkish Lira fell to all-time lows on Tuesday, extending the following slide Incumbent President Recep Tayyip Erdogan is re-elected.
The coin was last traded at 20.15 against green silver coin around 5 a.m. local time Tuesday, breaking through Monday’s low. Earlier in the session, it briefly weakened to 20.2 levels against the dollar. The lira has lost more than 7% of its value since the start of the year.
The Turkish Election Commission on Sunday confirmed that Mr Erdogan had won the 2023 Turkish presidential election with 52.14% of the vote, while his rival Kemal Kilicdaroglu received 47.86%.
“If a major move to weaken the lira is to be avoided and a potential systemic economic crisis is to be avoided, then Erdogan needs to act quickly and appoint someone like Simsek to lead the economy, ” BlueBay Asset Management senior EM Sovereignty Strategist, Timothy Ash said by e-mail.
Mehmet Simsek is a former Turkish finance minister who is known for his market-friendly policies. He then went on to become the country’s deputy prime minister from 2015 to 2018.
“The question is whether anyone like that is free enough to make the necessary economic policy changes – like raising interest rates,” Ash continued.
Turkey’s monetary policy is focused on the pursuit of growth and export competition rather than inflation control, and Erdogan espouses the unconventional view that raising interest rates will increase inflation.
“There is a widespread expectation that [the lira] will weaken in the coming months,” Steven Englander of Standard Chartered Bank told CNBC on “Street Signs Asia” on Monday.
He added that Türkiye has “a lot of economic problems” that will become more tense once Mr Erdogan returns to power.
Meanwhile, Goldman Sachs analysts stated in a research note that, after the results of the second round of elections, the focus of the market will continue to be on the central bank’s foreign reserves and the lira. .
“International reserves have been steadily decreasing since the beginning of the year and are close to the level of the previous TRY [Turkish lira] volatility spiked,” the investment bank analysts wrote.
