Global Courant 2023-05-15 01:38:55
(Adds JPMorgan, Goldman Sachs; updates prices)
LONDON, May 14 (Reuters) – The Turkish lira fell to a new two-month low as financial markets began trading following Sunday’s presidential and parliamentary elections in the country, with the race for president appearing to be heading for a dead end. second round.
The currency weakened to 19.70 against the dollar before paring some of its losses to 19.66, en route to its worst session since early November.
That was not far from the 19.80 level it reached in early March after February’s deadly earthquakes.
Parties from both incumbent Tayyip Erdogan and opposition rival Kemal Kilicdaroglu claimed the lead, but sources on both sides admitted they may fall short of the 50% threshold to win outright.
The presidential vote will decide not only who leads Turkey and shapes the foreign policy of the NATO member state of 85 million, but also how it is governed and its economic future amid a deep cost-of-living crisis.
“It is difficult to predict that a market-positive scenario will emerge after today’s double vote in Turkey,” Teneo’s Wolfgango Piccoli wrote in a note to clients.
Analysts expect the lira to undergo sharp adjustments in the wake of the election after years of economic imbalances and unorthodox monetary policies.
JPMorgan predicted the lira could fall to levels of 24-25 per dollar. Goldman Sachs said in a note in recent days that its calculations showed the market was pricing the lira to weaken by 50% over the next 12 months, including a sharp post-election devaluation.
The lira, which is prone to sharp swings before regular trading hours, has weakened by 5% since the start of the year.
The currency has lost nearly 95% of its value over the past decade and a half as the economic policies of the sugar rush have led to spectacular boom and bust cycles and rampant periods of inflation and currency turmoil.
A possible second round is scheduled for May 28. (Reporting by Karin Strohecker; editing by Frank Jack Daniel and Chris Reese)
