Global Courant 2023-05-30 09:23:35
People walk next to a Turkish national flag at the historic Grand Bazaar in Istanbul.
Ozan Kose | AFP | Getty Images
The Turkish lira fell to another all-time low on Tuesday, extending its fall following the re-election of incumbent President Recep Tayyip Erdogan.
The currency last traded at 8:15 p.m. against the greenback, around 5 a.m. local time, surpassing Monday’s lows. 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 beginning of the year.
Turkey’s Election Commission confirmed on Sunday that Erdogan won Turkey’s 2023 presidential election with 52.14% of the vote, while his opponent Kemal Kilicdaroglu received 47.86%.
“If a major move weakens the lira, and a potential systemic economic crisis is to be avoided, Erdogan needs to act quickly and appoint someone like Simsek as an economic point person,” said Timothy Ash, Senior EM Sovereign Strategist of BlueBay Asset Management, via email. .
Mehmet Simsek was the former finance minister of Turkey who was known for his market-friendly policies. He then became the country’s deputy prime minister from 2015 to 2018.
“The question is whether such a person will have enough freedom to make economic policy changes that are needed — such as rate hikes,” Ash continued.
Turkey’s monetary policy emphasizes the pursuit of growth and export competition rather than taming inflation, and Erdogan subscribes to the unconventional view that raising interest rates increases 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 Turkey has “a lot of economic problems” that will get worse after Erdogan’s return.
Meanwhile, analysts at Goldman Sachs stated in a research report that, post-election results, the focus for the market will continue to be on central bank foreign exchange reserves and the lira.
“International reserves have fallen continuously since the beginning of the year and are close to the level at which TRY (Turkish lira) volatility soared previously,” the investment bank analysts wrote.
(TagsToTranslate)Recep Tayyip Erdogan
