The Turkish Lira (TRY) weakened against the Pound (GBP) and other major peers on Monday after Fitch Ratings warned that the election of Recep Tayyip Erdogan to the position of President would prove to be negative for the nation’s economy.
According to Fitch, Erdogan’s election to President will do little to improve the country’s credit profile.
As a result, the Lira weakened, reversing its earlier gains from improved market sentiment.
Despite a strong backing from the Turkish electorate some are concerned that Erdogan will attempt to take even more control.
‘If Erdogan, who clearly wants to be in charge of everything in Turkey including monetary policy, forces the central bank to cut interest rates far more aggressively than the market currently anticipates, this would leave Turkish assets far more vulnerable to negative offshore factors. Any measures that would seriously undermine CBT’s independence would leave the Lira particularly vulnerable,’ said a currency strategist from Rabobank.
The country’s election board announced Mr. Erdogan had won the Presidential vote according to preliminary results, obtaining enough votes to avoid a runoff.
With 99% of the ballots counted, the Prime Minister managed to secure 52% of the vote, far ahead of his nearest opponent Ekmeleddin Ihsanoglu, a diplomat with a low profile in domestic politics who achieved 38% of the vote.
Pound Sterling to Turkish Lira Exchange Rate Forecast
Sterling meanwhile found support ahead of Wednesday’s Bank of England data releases. Economists will be keen to see whether wage growth in the UK will improve.
If so then Sterling is likely to strengthen, as investors will likely increase their bets for an interest rate hike before the end of the year.
Also due for release on Wednesday is the latest UK unemployment and inflation data.
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,3.6066 ,
Euro,, Turkish Lira,2.8750 ,
US Dollar,, Turkish Lira,2.1479 ,
Australian Dollar,, Turkish Lira,1.9810 ,
[/table]
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