Turkey lira climbs 3 percent after Erdogan election win

Turkey lira climbs 3 percent after Erdogan election win
Investor confidence was shored up after Erdogan secured a decisive victory, ending worries political uncertainty would drive down the currency.
2 min read
25 June, 2018
Erdogan holding an old Turkish lira banknote at a news conference [Getty]

Turkey's lira surged three percent in value against the US dollar following news on Monday of President Recep Tayyip Erdogan's decisive election.

The lira, which had lost some 20 percent in value against the dollar this year, was trading at 4.54 to the dollar and 5.3 to the euro. 

Erdogan won Sunday's presidential elections in the first round and saw his ruling party-led alliance win an overall majority in parliamentary elections, according to preliminary results.

Turkish voters had for the first time cast ballots for both president and parliament in the snap polls, with Erdogan looking and his ruling Justice and Development Party (AKP) to extend their 15-year grip on power.

The outcome relieved investors who had feared a prolonged period of political uncertainty after the polls.

The Turkish economy has in recent weeks been plagued by worries about its underlying health despite high growth, with inflation well into double digits and the current account deficit widening.

Turkey helped strengthen the lira in June, raising interest rates. Erdogan also called on citizens in May to exchange their foreign cash to the lira to prop up the currency. 

"My brothers, could those of you who have euros and dollars under their pillows invest their money in liras?" he said in the eastern city of Erzurum.

The comment drew criticism from IMF chief Christine Lagarde, who said central banks should remain independent.

Erdogan has repeatedly said the lira's fall was a "conspiracy" by unnamed foreign powers to weaken Turkey.

Fears grew in the weeks leading up to the 24 June elections that a weak currency could drive down support for Erdogan. A lower-valued currency makes imports more expensive for Turkish people, and can lead investors to pull money out of the country. 

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