Turkish President Tayyip Erdogan.REUTERS/Umit Bektas
- The Turkish lira climbed 3% against the dollar on Monday, following the re-election of Recep Tayyip Erdogan as President of Turkey, arresting its sharp decline in recent months.
- Erdogan won Sunday’s elections with a 52.5% majority, as reported the state-run Anadolu Agency.
- Some commentators expect increased investor confidence to wear off, as focus turns to long term concerns Turkish economics and politics.
The Turkish lira climbed on Monday following news of another election victory for Turkish President Recep Tayyip Erdogan and a parliamentary majority for an alliance led by his party.
The currency rose 3% against the dollar and the euro, to its highest level in two weeks after the results were confirmed. It has since stabilised.
The chart below shows the downward move of the euro as the lira rose:
asdf
Markets Insider
Erdogan secured 52.5% of the votes according to the state-run Anadolu Agency, with only 2% of ballots left to be counted, amounting to a strong enough majority to avoid run-off elections.
Despite the elections having been conducted in what Amnesty International described as a "climate of fear," commentators said the assurance of political stability has at least temporarily attracted investors back to the market.
But the lira is still down 16% against the dollar this year following what has been called a spreading EM debt contagion, and concern remains over long term issues with the country and its currency, which investors may again focus on after the election passes.
"In the past, Turkish assets have responded positively to political events that were perceived as increasing political stability," analysts at Goldman Sachs said in a note before the election.
"However, President Erdogan’s comments on monetary policy during the election campaign—advocating lower interest rates and indicating that he would play a more active role in monetary policy—have raised concerns over the future direction of monetary policy in the event of this outcome," Goldman added.
Erdogan has previously described high interest rates as "the mother and father of all evils." Investors have expressed concern over the views and a leaning to other unorthodox monetary policies.
The Turkish currency has lost nearly 75% of its value against the dollar in the last ten years.
"The recent financial market turmoil means that a sharp slowdown is [in] the cards," Jason Tuvey, senior emerging markets economist at Capital Economics said in a note to clients.
"The risks stemming from the election are more likely to materialize over the longer term—in particular, the risk that an Erdogan-AKP government pursues much looser fiscal and monetary policy."
Read again The Turkish lira jumps after Erdogan's election victory : https://ift.tt/2lvB9W3Bagikan Berita Ini
0 Response to "The Turkish lira jumps after Erdogan's election victory"
Post a Comment