Traders fear of Turkish lira collapse if Erdogan wins
ALBWABA – The Turkish lira (TRY) has fallen slightly, by 0.27 percent, against the United States (U.S.) dollar over the past five days, according to Google Finance.
Real-time data on the exchange value of the lira was not available on Google, but six-month trends showed the lira has been on an overall decline.
The lira is currently trading at record lows of TRY19.5783 against the U.S. dollar.
However, news and media outlets have been warning about an imminent collapse in the value of the lira, as the Turkish elections race intensified between incumbent Recep Tayyip Erdogan and opposition candidate Kemal Kilicdaroglu.
According to CNBC, traders are concerned that the lira will crash if Erdogan retains his presidency.
Surveys estimated more than 64 million eligible voters in Turkey are eligible to cast their ballots in these elections. V
oting is underway, Sunday, as current President Erdogan faces the biggest political challenge of his two-decade rule, AlJazeera highlighted.Bloomberg also predicted a decline in the value of the Turkish lira in an analysis published last Thursday, May 11.
However, the New York-based outlet explained that the future of Turkey’s $900 billion economy hinges on whether policy changes will ensue after these elections.
Volatility and risk-protection costs have soared, some trading desks have suspended transactions, and even risk-taking hedge funds are staying out, Bloomberg reported.
“Markets want to see political stability and orthodox macroeconomic policies,” Viktor Szabo, an investment director at Abrdn in London, told the financial news outlet.
Foreign investors look to Erdogan’s opposition to save Turkish lira
"A large-scale opposition victory [in Turkish elections] would get us closer to a market-positive outcome," he underlined.
Moreover, Reuters reported bleak forecasts for the Turkish lira following the elections as well.
Bankers at JP Morgan reportedly predicted that the lira will fall to around TYR30 against the dollar. They don't see major changes in Turkey’s unorthodox economic policy.
The ongoing elections were described by Reuters as marking "a fork in the road for both Turks battered by an inflation-driven cost of living crisis and for international investors."
Both Bloomberg and Reuters have underlined that foreign investors have been bailing out of Turkey over the past few years.
