Analysts from a prominent financial services firm note that the Erdogan administration appears to be pursuing a monetary policy that many observers in North America and beyond view with skepticism. They contend that the prospect of Erdogan seeking another term could place additional pressure on Turkey’s currency by complicating the central bank’s decision-making cadence. In their assessment, the currency market remains highly sensitive to policy signals connected to leadership credibility and the perceived durability of monetary stewardship. These reflections come as Turkish financial markets continue to experience notable volatility.
Two weeks after the first round of Turkey’s presidential race, the lira extended its decline, slipping about 1.7 percent against the dollar in the international currency market. By Friday, May 26, the exchange rate suggested one dollar was worth roughly 19.97 lira. Market participants cited a mix of domestic political uncertainties and expectations about future policy directions as primary catalysts for the move.
On the opposition side, Kemal Kılıçdaroğlu has signaled a move toward a more conventional framework for monetary policy should he win. The program he advocates would grant the Central Bank greater autonomy from presidential influence, a shift that many analysts see as potentially stabilizing expectations and reducing currency volatility over the medium term. Such a change could help anchor policy credibility and align monetary decisions with market-facing objectives.
In this context, Union Investment suggests that the lira might experience a period of near-term strength if markets perceive a credible path of policy continuity or an improvement in central bank independence. On the other hand, Capital Economics warns that the election’s outcome, regardless of the side, could complicate policymakers’ attempts to steady the lira. Their view is that political transitions may introduce new uncertainties that keep the currency under pressure as investors reassess risk and policy clarity.
Earlier remarks attributed to Erdogan reflect a sustained sense of responsibility toward governance over the next five years. Market observers note that this stance underscores the incumbent leadership’s confidence in its mandate, while investors weigh the implications for fiscal and monetary discipline. The eventual impact on investment flows will depend on how credibility, policy transparency, and institutional autonomy are perceived to evolve as the political landscape unfolds.