Turkish lira weakens further against dollar after elections

Business Tuesday 26/June/2018 13:44 PM
By: Times News Service
Turkish lira weakens further against dollar after elections

Istanbul: The Turkish lira weakened further against the dollar on Tuesday amid persistent concerns over the future course of monetary and economic policy following President Tayyip Erdogan's victory in Sunday's presidential election.
Erdogan, who has now assumed sweeping new powers under a revised constitution that came into effect after the election, took 52.6 per cent of the vote in the presidential race, with almost all votes counted.
His AK Party took 42.5 per cent in the parliamentary election and its nationalist allies beat expectations with 11.1 per cent, giving their alliance a legislative majority.
The lira stood at 4.7110 per dollar at 0725 GMT on Tuesday, compared with Monday's close of 4.6825.
The Turkish currency, which has lost some 18 per cent of its value this year, had firmed to as much as 4.5375 in early trade on Monday on hopes of greater political stability, but later surrendered its gains.
Investors have welcomed the prospect of a stable working relationship between the president and parliament, but have doubts over Erdogan's commitment to deliver reforms and his willingness to tackle structural issues such as double-digit inflation and a widening current account deficit.
"Immediate priorities include undertaking measures to improve business confidence," said Roger Kelly, the Lead Regional Economist at the European Bank for Reconstruction and Development (EBRD).
Such measures could include lifting Turkey's state of emergency, introduced soon after a failed military coup in 2016, and addressing institutional capacity issues as well as ensuring the rule of law, Kelly said.
In the long-term, structural reforms to rebalance the economy away from excessive reliance on domestic consumption could help bring down the current account deficit, Kelly added.
The 10-year benchmark bond yield rose to 17.51 per cent from Monday's close of 16.92 per cent, while the two-year yield rose to 19.36 per cent from 19.24 per cent.