Insider Economy Turkish lira turns positive; Istanbul slips from Erdogan

Turkish lira turns positive; Istanbul slips from Erdogan

The Turkish lira firmed on Monday, clawing back early losses after President Tayyip Erdogan’s AK Party lost control of the capital Ankara in local elections and trailed in Istanbul, Turkey’s largest city, as the last votes were tallied.

At 1137 GMT, the lira stood at 5.5290 against the U.S. dollar, firming from Friday’s close of 5.5550. It weakened as far as 5.7001 in early trade.

The lira tumbled almost 30 percent against the dollar in last year’s currency crisis. In an echo of that crisis of confidence, it has swung wildly in the last six trading days as the government and central bank unleashed a series of stop-gap support measures.

Turkey’s economic recession weighed on voters.

In Istanbul, the mayoral candidate of the main opposition Republican People’s Party (CHP), Ekrem Imamoglu, and his AKP rival, ex-prime minister Binali Yildirim, both said Imamoglu was around 25,000 votes ahead. Earlier, both parties had declared victory.

In Ankara, the CHP mayoral candidate, Mansur Yavas, won a clear victory, according to Turkish broadcasters.

The results, if they stand, will mark the first time the AK Party and its Islamist predecessors have lost control of Turkey’s two largest cities in 25 years.

POPULIST MEASURES?

Markets are nervous that the results of the election will lead Erdogan to pursue more populist measures, said Inan Demir, senior emerging market economist at Nomura.

“The losses in the largest cities will lead him to be more defensive, trying to shore up electoral support via populist measures, which increases risks for markets, for fiscal policy and monetary policy,” he said.

Istanbul’s BIST 100 stock index rose 0.91 percent on Monday.

In a speech early on Monday, Erdogan pledged that Turkey would now focus on its troubled economy. Turkey slipped into recession late last year.

“The expectation is that emphasis will be given to needed structural reforms in a period of four years without elections,” said one banker, who declined to be identified.

“If there is a delay in this, it will increase pressures on markets,” he said, adding that the lira would likely remain in a 5.50-5.70 band while the uncertainty persists.

In the week ahead of elections Turkish stocks, bonds and the currency sold off, prompting the government to direct banks to temporarily starve a key London market of lira liquidity, according to officials.

Investors were also weighing up a statement on Monday from Moody’s rating agency, which said the erosion of Turkey’s foreign currency reserves is a credit negative and that central bank use of reserves to prop up the lira currency poses renewed questions about its transparency and independence.

The renewed slip in Turkey’s financial markets and uncertain policy reaction to recession raises a risk of further capital flight, Moody’s said, adding that the results of local polls would likely determine the future path of macroeconomic policy.

Both Erdogan and Finance Minister Berat Albayrak, the president’s son-in-law, have promised to implement reforms after the elections to address economic woes.

Every decision by the government will have an impact on the lira as investors look forward to a package of reforms to be revealed in coming weeks to restore confidence in the lira after last week’s drastic measures, said Piotr Matys, emerging markets forex strategist at Rabobank.

“While all previous AKP electoral victories were perceived as a source of political stability, on this occasion investors could be reluctant to give the administration benefit of the doubt that the next four years will be dominated by efforts to rebalance the economy and address structural vulnerabilities.”

(Reuters)

Top Stories

Man pays 22 thousand fine for trapping and killing dozens of ambelopoulia

  Α sixty three year old poacher in the Nicosia district was fined 22 thousand four hundred euro for illegally trapping and killing 68 songbirds...

26 covid patients at Famagusta General

  Twenty six patients suffering from coronavirus are currently being treated at the Famagusta General, the referral institution for covid-19, as the government is considering...

Low pressure system gradually brings rain (not weekend), as temperatures drop

  A low pressure system is gradually affecting the area, as rain is expected over the next four days, (but not the weekend) with temperatures...

Strong quake kills 24 people in Turkey and 2 in Samos

  Twenty four people were killed in Turkey and two in Greece after a strong earthquake struck the Aegean Sea on Friday, bringing buildings crashing...

166 new cases of COVID-19 on Friday

The Health Ministry announced 166 new COVID-19 cases on 30 October, out of 3,672 laboratory tests, taking confirmed infections to 4,217. The break-down of new...

Taste

Squash soup

Ingredients: 1 kg pumpkin, cut into small cubes, approximately 5 cups 2 medium (400g) sweet potatoes, cut into cubes, approximately 2 ½ cups 1 chopped leek, only...

Mezedes

No visit to Cyprus is complete without enjoying the traditional meal of many small dishes known as ‘meze’. This large feast, which has been a...

Prawns with fried cheese, barley shaped pasta

Put the barley shaped pasta into a small pan with salted water, bring to a boil and when tender, drain. Peal the prawns leaving...

Salmon and shrimp sheftalies

Mix all ingredients for tabbouli in a bowl and keep to one side so flavours can combine. Prepare the sheftalies: wash and soak the casing...