Turkish Lira continues to tank as the election only a few weeks away

FXOpen

An absolute testimony to the resilience and incredible work ethic of the population of Turkey is the resounding commitment that the country’s highly diversified industry sectors have continued to operate at full capacity and, to some extent, even more so than in other developed economies.

This commitment to keeping business going, in the form of welcoming tourists from every nation in the world, continuing to export engineering equipment, electronic goods, cars, clothing and foodstuffs whilst very diplomatically not participating in any geopolitical betes noires such as lockdowns or sanctions.

Turkey is, and always has been, absolutely open for business for everyone.

All of this laudable work ethic continues against a tough backdrop of a now five-year-long crisis involving the continually depreciating value of the Turkish Lira, one of the most popularly traded exotic currencies throughout the last two decades.

Inflation in Turkey reached an astonishing 70% last year and is now standing at approximately 55%, which is still incredibly high.

Now, as we begin the month of April, the Turkish population is preparing for the nation’s General Election, which is only a few weeks away and set to take place on May 14.

Current President Recep Tayyip Erdogan, who has been President since 2014, is running again for election, and whilst he has been quite popular over the past ten years, his economic policy, which has caused tremendous struggle among individuals and businesses alike, has worn the voter base thin.

Therefore, it could go either way; however, the Turkish Lira has not begun to make its way back down from the seemingly endless depreciation in its value.

Today, the British Pound, US Dollar and Euro all made more gains against the troubled Lira, which demonstrates investor confidence that is looking at the Erdogan years, which have, for over 50% of the time in which Erdogan has been in office, been times of catastrophic freefall for the Lira.

The bright news is that in 2023, Turkey, which is the world’s tenth largest economy, is set to become an economic powerhouse with an economy worth approximately $2 trillion, a per-capita annual income of $25,000 which is far higher than when Erdogan came to office and is almost up to Western standards, and an export market which provides Turkey with a $500 billion revenue from selling its products overseas.

Those are substantial figures for a hard-working nation.

Today, the British Pound is trading at 23.99 Lira to the Pound, which is a significant rise for the Pound over yesterday, when at the beginning of the trading day, the Lira was trading at 23.57 against the Pound.

There is an air of optimism in Turkey, and with voter behaviour shaped by political loyalty and other cultural values rather than purely monetary policy, it appears that investors consider the upcoming election as a relative non-issue and are looking at the Lira’s value through the same eyes as the past five years.

Thus, it may be that in the run-up to the election, there could be some ‘business as usual’ dynamics as it will clearly be difficult to imagine that Erdogan would be replaced by an opponent. However, if that does happen, and today there are analysts who believe there is a 50% chance of that happening, the Lira may respond with volatility.

Trade over 50 forex markets 24 hours a day with FXOpen. Take advantage of low commissions, deep liquidity, and spreads from 0.0 pips. Open your FXOpen account now or learn more about trading forex with FXOpen.

This article represents the opinion of the Companies operating under the FXOpen brand only. It is not to be construed as an offer, solicitation, or recommendation with respect to products and services provided by the Companies operating under the FXOpen brand, nor is it to be considered financial advice.

Latest from Financial Market News

The US Continues to Trump the Euro Economy on Key Metrics, But What Is Next? Is the UK really in a recession? Perhaps 2024 data will be different Weekly Market Wrap With Gary Thomson: US INFLATION, GBP/USD, GOLD, BITCOIN EURGBP continues to be suppressed during February. Will it rise again? Weekly Market Wrap With Gary Thomson: S&P 500, CAD, GBP/USD, AMZN

Latest articles

Forex Analysis

Exchange Rates Consolidate at the Beginning of the Week

Trading participants continue to evaluate the prospects for a change in the US Federal Reserve's monetary course against the backdrop of the publication of the minutes of the January meeting. Officials reiterated their cautious stance on lowering borrowing costs and,

Financial Market News
Forex Analysis

The US Continues to Trump the Euro Economy on Key Metrics, But What Is Next?

A clear measure of public confidence in a national economy, as well as the ability to access a key component of it, is how many new homes are being sold compared to previous months. There are a number of important

Forex Analysis

NZD/USD Technical Analysis: Bearish Start To News-heavy Week

After 8 consecutive days of growth, the price of NZD/USD is forming a bearish candle this morning, thereby indicating possible concerns among market participants at the beginning of a week full of important economic news: → On Wednesday, at 4:

CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 65.68% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work, and whether you can afford to take the high risk of losing your money.