The Turkish lira approached a historic low last week amid news that incumbent Turkish President Recep Tayyip Erdogan had won the runoff. This is evidenced by trade data.
As of 12:14 Moscow time, the US dollar/Turkish lira parity was trading at 20,900 lira per dollar on the international Forex market. Compared to the beginning of trading, the lira fell 1.05%. Then the lira exchange rate was corrected, but very little. As of 13:17 Moscow time, the dollar is trading at 20,882 liras, depreciating by 0.72% since the beginning of the transaction.
The dollar was 19,972 liras at the auction on May 26, and 20.1 liras on May 25th.
Analysts at Morgan Stanley assumed that the lira would fall further against the dollar due to Erdogan’s low-interest stance on monetary policy. According to forecasts, by the end of 2023, the lira will depreciate by 40% against the US currency.
BCS World of Investments stockbroker Mihai Zeltser admitted that the lira will soon start to strengthen.
“Erdogan’s re-election is interpreted as the continuation of monetary policy – soft policy against the backdrop of very high inflation. Previously, such experiments led to the unlimited devaluation of the lira. However, the result of the elections was generally at market price and inflation in the country began to decline. This actually means that the moment of fixation, the technical strengthening of the lira, is approaching. “The option for the US dollar to fall below 19 lira (the previous winter maximum for the usd/try pair) is quite real.”
Erdogan won the second round of the presidential elections held on Sunday, May 29. He received 52% of the votes.
It was previously reported that annual inflation in Turkey fell from 50.5% to 43.68% in April 2023.