Financial markets in Turkey are preparing for more turmoil with the start of the second round of elections amid the increasing possibility that President Recep Tayyip Erdogan will win a third term and thus continue his unconventional policies based on interest rate cuts to boost growth even with rising inflation.
Erdogan is also poised to win despite Turkey going through its worst cost-of-living crisis in decades during his rule and allegations of neglect in the wake of the catastrophic earthquakes.
What awaits Türkiye after the presidential elections are decided?
The percentage of financial derivatives traders who expect the exchange rate of the Turkish lira to decline to 29 liras per dollar from the current levels, near twenty liras, has risen to 53%, from 36%, after the first round of the Turkish elections.
Erdogan’s rival, Kemal Kilicdaroglu, is focusing his campaign on restoring Turkey’s credibility among international investors and rooting out corruption from state institutions.
Kilicdaroglu’s victory would end Erdogan’s policy that the only way to fight inflation is to lower rather than raise interest rates.
