Election comment from foreign economists: Possibility of policy change being monitored

Market players focused on the presidential runoff on Sunday. Expectations have risen that there will be a final fall in the Turkish lira after the elections. Stocks and bonds fell.

According to the electoral and economic analysis of the US financial agency Bloomberg; Markets are evaluating the possibility of a change in the unconventional economic model that relies on strict exchange rate controls and rate cuts to support growth despite inflation.

During this time, the government made several interventions to support the lira, causing Turkey’s net reserves to fall below zero for the first time in 21 years.

The news also included expert opinions on the future of financial markets in Turkey. Comments from market experts were as follows:

ERDOGAN’S SCENARIO HAS A PRICE

“The expectation is that Erdogan wins, so I think he has a price in the market,” said Uday Patnaik, head of the emerging markets unit at Legal & General Investment Management, the UK’s biggest asset manager.

“The question is whether there has been any change in their unorthodox monetary policy,” added Patnaik.

‘CONDITION OF POLICY CHANGE’

“Without an orthodox policy change, these measures to support the lira and lending are limited in scope,” said Patrick Curran, a senior economist at London-based Tellimer.

Tellimer said: “Unless there are sharp increases in interest rates and a devaluation of the lira to attract foreign investment and reduce the current account deficit, the paper house will eventually collapse.”

Türkiye HAS LITTLE AREA OF INTERVENTION

Kaan Nazli, director of The Hague-based Neuberger Berman, said that as bookings dwindle, Turkey has a little more room, if not a lot, to continue interventions.

Nazlı stated that Turkey could access between $23 and $25 billion in available cash, including swap lines with banks and other central banks.

According to a Bloomberg Economics estimate, officials spent $177 billion in the currency markets over 16 months to support the lira. Therefore, it is thought that there is little room left to support the currency market.