Turkey’s currency, the lira, got stronger after the opposition party won local elections against President Erdogan’s party. Stocks went up and down, but ended the day slightly higher.
Experts believe the ruling party lost because:
– Prices in Turkey are rising very fast (inflation is near 70%).
– The economy is slowing down. It costs a lot more to borrow money due to high interest rates.
– Erdogan says he’ll keep these economic policies, even after the election loss.
The lira briefly hit a record low of 33 to the dollar, but then improved to below 32. Many foreign financial markets were closed for Easter.
Turkey’s main stock market, the BIST 100, initially rose over 1%, especially bank stocks. It later dipped by 1.8%. At 1329 GMT, the indexes were up 0.26% and 1.72% respectively.
Turkey’s 5-year credit default swaps (which measure investment risk) stayed mostly the same. Bond prices slightly increased.
Investors are now demanding a smaller premium (4 basis points less) to hold Turkish bonds compared to safe US bonds.
This election was a big defeat for Erdogan and his AKP party, who have ruled for over 20 years. The opposition party is now stronger, and Istanbul’s Mayor, Ekrem Imamoglu, looks like Erdogan’s main rival.
Turkey’s Finance Minister, Mehmet Simsek, said the country will continue its plan to lower inflation and make the economy grow.
Goldman Sachs believes markets will react positively because Erdogan accepted the election results and will keep his economic policies. They think this, plus other improvements, will make the lira stronger.
Tellimer Insights agrees that Erdogan might need to keep his economic team to fight high inflation. However, they warn that in the future he might return to policies that are more popular, even if they’re not as good for the economy.
– Turkey election results impact
– Lira gains after opposition win
– Turkish stocks post-election
– Turkey investment outlook
– Erdogan economic policies
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