Turkish Lira Doesn’t Like Perspective of Runoff Election in the Country

Turkey's lira (USDTRY) dropped to near a 2-month low, e-bike the country’s sovereign dollar bonds tumbled and the cost of insuring, CDS, exposure to the country's debt spiked as the presidential election appeared headed for a runoff with incumbent president Tayyip Erdogan in the lead. The value of the currency cratered by more than 40% last year as Erdoğan's unorthodox economic policies fueled abnormal inflation.

The lira was last at 19.66 to USD, after reaching 19.70 in earlier today’s trading, marking its weakest level since a record low of 19.80 hit in March this year following deadly earthquakes, even as USD itself is showing some weakness today.

In the parliamentary vote, the People's Alliance including Erdogan's AKP appeared headed for a majority. Erdoğan has been at the helm of Turkey's government for two decades, and may be winning another 5 years in power. With 98% of the votes counted, neither Erdoğan nor Kilicdaroglu have reached the 50% threshold of votes needed to declare a decisive victory. Erdoğan has performed better than polls suggested, tallying about 49% of the vote to the opposition's 45%.