Turkish lira falls after president’s ruling party Recep Tayyip Erdogan suffered a surprising defeat in the local elections this Sunday, with control of many cities in Turkey, including Istanbul and Ankara, passing to the opposition.
The lira gives up 0.2%, to 32.4328 liras per dollar, reaching a historical low in closing terms. The coin lost about 9% of its value so far this yearthe second largest depreciation among emerging market peers after the Chilean peso.
“In Turkey, municipal elections on Sunday ended in tears for Erdogan-backed AKP leaders in major cities, including Istanbul. Although the news hints at potential change – for the better – ahead, we will not see a significant change immediately after the municipal elections“, writes Ipek Ozkardeskaya, senior analyst at Swissquote Bank.
“Monetary policy will remain unchanged and the dollar/lira – which is trading higher after the last election – should continue to rise at a potentially faster ratesince the central bank could put less effort into counteracting the depreciation of the lira now that the elections have concluded,” the expert adds.
For the first time since its founding in 2001, the Justice and Development Party (AKP) loses an election in the popular vote. The elections they strengthen the mayor of Istanbul, Ekrem Imamogluas the president’s main future rival.
Analysts point out that Erdogan and his party, which They have ruled Türkiye for more than two decadeshave fared worse than the polls predicted due to runaway inflation, dissatisfied Islamist voters and, in Istanbul, Imamoglu’s appeal.
“The favor and trust that our citizens have in us has really been demonstrated,” said Imamoglu, 53, a former businessman who entered politics in 2008, according to ‘CNBC’.
Erdogan’s word after defeat
The Turkish president, Tayyip Erdoganpromised on Monday to correct the errors that led his party to defeat in local electionsin which the oppositionn capitalized on economic problems and alienated Islamist voterssowing uncertainty about their reform plans.
Sunday’s vote marked the worst defeat for Erdogan and his Justice and Development Party (AKP) In more than 20 years in power, revitalizing the opposition and strengthening the position of the mayor of Istanbul, Ekrem Imamoglu, as the president’s main rival.
Redrawing a political map long dominated by the AKP, The Republican People’s Party (CHP) won the popular vote for the first time in decades and swept most major cities, penetrating deeply into conservative central Turkey.
According to analysts, voters lost the patience in the face of a cost of living crisis caused by inflation close to 70% and Erdogan’s divisive political style.
Erdogan delivered a somber and introspective speech in the early hours of Monday. “This is not the end for us, but a turning point,” he said, acknowledging a “loss of height” for the AKP.
“If we have made a mistake, we will fix it,” he told the crowd gathered at the AKP headquarters in Ankara, without indicating what changes he might make within his party or in politics.
In response, the Turkish stocks rose and the lira – which has lost more than 80% of its value in five years – hit another historic low against the dollar on a holiday for many global financial markets.
Source: Ambito
