Turkish Lira dips to record low post-election

The Turkish lira fell to a record low of 32.4328 per dollar, a 0.2 per cent drop, following a surprise defeat for President Recep Tayyip Erdogan’s ruling party in local elections, Bloomberg reported on Monday.

The currency has depreciated by about 9 per cent this year, the second-largest among emerging markets after Chile’s peso.

The loss marks the first time Erdogan’s Justice and Development Party has trailed the Republican People’s Party in municipal polls nationwide.

Despite investor concerns, Erdogan accepted the defeat and acknowledged the need for lessons to be learned.

The shift towards a more orthodox monetary policy, including a cumulative 4,150 basis points of interest rate increases, has been welcomed by investors, leading to a net purchase of $4.9 billion in Turkish bonds and stocks.

However, the post-election period is expected to be volatile, coinciding with an all-time low in central bank net foreign currency reserves at negative $65 billion and a likely inflation peak above 70 per cent in May.