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Possible Erdogan victory: Lira falls to record low - stock market suspends trading

2023-05-17T04:08:10.323Z

Highlights: Turkey's leading index, the BIST-100, fell by up to 6.4 percent in pre-market trading after Sunday's election. The sharp decline in the stock market prompted the Istanbul Stock Exchange to suspend trading for a short time. Overall, the Turkish lira fell 0.5 percent to 19.70 against the US dollar, hitting a record low. The currency's value has plummeted by more than 40 percent over the past year as Erdogan's economic policies have pushed inflation to unprecedented heights.



Recep Tayyip Erdogan and the Turkish lira. A never-ending story. His unorthodox methods are causing problems for the currency.

Ankara - If Recep Tayyip Erdogan, President of Turkey, is re-elected, the Turkish lira is threatened with a further currency decline. Already, the lira has fallen to a new record low against the US dollar. Turkey's leading index, the BIST-100, fell by up to 6.4 percent in pre-market trading after Sunday's election. However, Erdogan had done much better than polls had assumed and could triumph again in the Turkish election. However, his rival Kemal Kilicdaroglu was at least able to force the president into the run-off.

"An opposition victory seems less likely, and this will disappoint investors who were hoping for a return to orthodox economic policies and a more credible commitment to tackling Turkey's inflation problem," Liam Peach, senior economist for emerging markets at Capital Economics, told CNN.

Possible Erdogan victory: Turkish lira falls to record low

The sharp decline in the stock market prompted the Istanbul Stock Exchange to suspend trading for a short time. The BIST-100 closed down 6.1 percent, while its banking sub-index ended the day down 9.2 percent. Overall, the Turkish lira fell 0.5 percent to 19.70 against the US dollar, hitting a record low. The currency's value has plummeted by more than 40 percent over the past year as Erdogan's unorthodox economic policies have pushed inflation to unprecedented heights.

According to the rating agency Moody's, an opposition victory "could improve the prospects of a return to orthodox economic policies, which, if implemented effectively, would have a long-term positive impact on the country's credit profile."

Turkish President Recep Tayyip Erdogan gives a speech at the party's headquarters in Ankara after the presidential election. © Ali Unal/AP/dpa

Erdogan to blame for high inflation and weak lira

Nevertheless, "it will be a challenge to reverse the distortive measures of the last two years," the agency explained. The Turkish economy is very volatile. Erdogan, despite mutual statements, has not managed to push inflation to normal levels. In October, it reached 85 percent, its highest level in a quarter of a century, but the actual values could be much higher.

Since 2018, people in Turkey have been suffering from the decline of the currency. Large parts of society are affected. From the working class to the bourgeoisie. Experts like Eissenstat blame Erdogan's conviction for the crisis. According to the prevailing economic opinion, low interest rates can further fuel inflation. Recep Tayyip Erdogan is a friend of low interest rates, but according to experts, this is fueling the currency decline. On the other hand, high interest rates would be necessary. (Moritz Serif)

Source: merkur

All news articles on 2023-05-17

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