Turkish lira weakens as elections loom

The Turkish lira weakened 0.6 percent on Thursday, pressured by investor concerns that parliamentary and presidential elections on June 24 could unleash political uncertainty.

Opinion polls have shown a tight race for parliament with President Tayyip Erdogan’s AK Party and its allies possibly losing their majority by a thin margin.

The Turkish currency, which has hit a series of record lows this year, stood at 4.7595 against the dollar at 0840 GMT, weakening from Wednesday’s close of 4.7320.

President Tayyip Erdogan said in an interview late on Wednesday that his ruling AK Party could seek to form a coalition if it fails to secure a parliamentary majority in Sunday’s elections.

The lira has lost around 20 percent against the dollar this year, making it one of the worst-performing emerging market currencies. It has been hammered by concern about President Tayyip Erdogan’s increasing influence over monetary policy.

Yarkin Cebeci, an economist at J.P. Morgan, said the close polls meant the elections were hard to call. “The market reaction will depend on initially the state of global risk appetite and then on the performance of the new government,” he said.

Turkey’s consumer confidence index rose to 70.3 points in June, from 69.9 points a month earlier, official data showed, three days ahead of Sunday’s polls. (RTRS)