The Pound slumped to its lowest -level in two months against the Turkish Lira on Monday after the Lira made the biggest gain amongst emerging market currencies following local election victory for Prime Minister Recep Tayyip Erdogan’s party.
The Turkish currency strengthened by 1.52% against the Pound and made gains against several other major currencies after the market deemed victory for Erdogan’s party in local elections as a positive for the Turkish economy.
“This is a bullish outcome for the local market simply because investors are not keen on heightened political uncertainty and instability. There is repricing of political risks to the downside, which is substantially supportive of Turkish assets,” said the head of emerging strategies at Societe Generale in an interview with Bloomberg.
The Turkish currency fell to record lows last year as political unrest rocked the country and as a corruption scandal threatened to topple Erdogan’s government. The Prime Minister’s Party won at the local elections after Erdogan campaigned on his government’s performance for delivering health care, the success of the economy and transport. He dismissed the corruption allegations as merely a move by political enemies to discredit him.
Also supporting the currency was the release of data which showed that the Turkish economy expanded more than forecast on both a yearly and quarterly basis. The nation’s balance of trade gap also narrowed.
Despite Monday’s rally and Erdogan’s election victory the Lira remains vulnerable to further political unrest and events across the Black Sea in Ukraine. Some of the currency’s strength was lost as geopolitical tensions edged higher after North and South Korea exchanged artillery fire earlier in the day.
Current Turkish Lira (TRY) Exchange Rates:
[table width=”100%” colwidth=”50|50|50|50|50″ colalign=”left|left|left|left|left”]
Currency, ,Currency,Rate ,
Pound Sterling,
,Turkish Lira,3.5982 ,
Euro,,Turkish Lira,2.9649 ,
US Dollar,,Turkish Lira,2.1570 ,
Australian Dollar,,Turksih Lira,1.9964 ,
[/table]
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