Istanbul vote on Sunday may positively impact Turkish lira: Analysts
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The AKP is trying to gain the upper hand in the financial stronghold of the country after incumbent Mayor Ekrem Imamoglu, Erdogan’s political opponent, won instead.
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The sun sets behind high buildings of a financial business area in Istanbul, Turkey, on Friday, March 22, 2024. (AP)
Analysts at Goldman Sachs Group Inc. see that the municipal vote in Istanbul on Sunday will incur an impact on the Turkish lira in a positive light, in the race being monitored by markets and investors, Bloomberg reported.
The team led by Kevin Daly said, “It should be positive for the Turkish lira, provided that the results are not contested in Istanbul or in other major cities."
Turkish President Recep Tayyip Erdogan is trying to gain back his party's rule, the AKP, in the financial stronghold of the country after the opposition CHP's incumbent Mayor Ekrem Imamoglu, Erdogan’s political opponent, won instead.
The CHP also has a hold on the capital Ankara and keeps power in the port city of Izmir, both losses for Erdogan, who has assigned former Environment Minister Murat Kurum to run for mayor of Istanbul in the March 31 polls.
Imamoglu and Erdogan are butting heads to win votes on Sunday.
This comes after Erdogan announced back in November that the Turkish lira's decline has come to an end, expressing a strong likelihood of the currency gaining strength against the US dollar.
Read more: Turkey achieves 10-year low unemployment rate in 2023
"The program we are conducting to reduce inflation with a very high probability can result in a real assessment of the lira's value. So the process of lira depreciation has ended, there is a high probability that the lira will strengthen," Erdogan told reporters.
The Turkish President noted that constructive reforms and prudent economic policies are instilling confidence among investors, with the expectation that this will result in an influx of liquidity and an actual improvement in the lira's exchange rate.
Goldman analysts still don't think the election outcome will affect the current monetary and fiscal policies, but pressure on reserves and the lira is expected to subside.
They also see the central bank maintaining a tight policy.
Imamoglu is the CHP's best bet as they hope to win back the presidency from Erdogan's AKP in the next round of presidential elections in 2028.
On March 31, 2024, Turks will head to the polls for the second time to elect municipalities' mayors and councilors, marking the thirteenth session of the Turkish local elections since its inception in 1963.#TurkeyElections pic.twitter.com/MUQdS2a229
— Al Mayadeen English (@MayadeenEnglish) March 24, 2024
Erdogan will remain president of Turkey until 2028 after winning 52,10% of the vote, giving him an entire decade in power as of yet after he originally became president in 2014.
