Turkey’s lira fell to almost a two-month low, as the presidential election shows that incumbent president Tayyip Erdogan is currently in the lead. Investors are disappointed as the end of Erdogan’s unorthodox economics does not seem to be near the end.
The Supreme Election Board is expected to announce the official results later today or tomorrow.
What we know so far
Millions of Turkish voters turned out on Sunday to participate in the presidential and parliamentary elections.
It is increasingly likely that a run-off election will be held between President Recep Tayyip Erdoğan and his main competitor Kemal Kılıçdaroğlu, as neither candidate seems poised to secure the necessary 50% majority for an outright victory in the presidential race. If a second round of voting is required, it is expected to take place on the 28th of May.
Erdoğan expressed confidence in having enough votes to win in the first round but stated his willingness to participate in a run-off.
Kılıçdaroğlu, on the other hand, declared his acceptance of a run-off and expressed confidence in his ability to win. He emphasised that despite Erdoğan’s lies and attacks, the desired outcome had not been achieved, urging caution and reminding people that victory is not guaranteed solely through speeches.
Kılıçdaroğlu alleged that certain counts were being obstructed by frequent objections and urged democracy workers to remain vigilant and ensure that every vote is counted.
The parliamentary vote share for Erdoğan’s AKP party has significantly decreased compared to previous legislative elections, marking the worst reported result in at least 20 years since the AKP came to power in 2002.
The overall parliamentary outcome suggests a victory for various nationalist parties, but it also signifies an unexpected loss for the six-party opposition coalition led by Kılıçdaroğlu, which had anticipated securing a majority. Kılıçdaroğlu had pledged to reinstate a parliamentary democracy system instead of Erdoğan’s presidential system if he wins.
Criticism of Erdogan voters
Following the earthquakes that struck the southern provinces of Turkey, some citizens have turned to social media to vent their frustration and disappointment with those who voted for Erdogan. The government has faced criticism for what is perceived as a sluggish response to the earthquakes. Many supporters of the opposition had anticipated that voters in the affected region would rally behind Kilicdaroglu, giving him an advantage in the vote tally. However, preliminary results released by the Anadolu Agency indicate that in Kahramanmaras, the epicenter of the earthquake, over 71 percent of the votes went to Erdogan.
Lira to drop further
After the withdrawal of third-party presidential candidate Muharrem Ince from the race last week, Turkish stocks and bonds rose, as it increased the likelihood of a Kilicdaroglu victory. However, analysts anticipate that the lira will decline in the aftermath of the elections, primarily due to years of economic imbalance and unorthodox monetary policies.
JPMorgan predicts a potential softening of the lira, while Goldman Sachs recently noted that market calculations indicate a 50% depreciation of the lira in the next twelve months. The lira has already weakened by 5% since the beginning of the year, and its value has plummeted by nearly 95% over the past fifteen years, as a result of volatile economic policies that led to cycles of boom and bust, high inflation, and currency market instability.
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