Lira eases to 2.7 against dollar as election nears

The Turkish lira slipped to 2.7 to the dollar on Thursday as the US currency gained globally, while concerns that Sundayand’s parliamentary elections could result in a coalition government continued to weigh on sentiment.
Yet, it recovered to 2.6650 against the greenback late on Thursday.
The lira also lost more than 0.2 percent against the euro to slip to 3.027 against the currency. Many investors hope Sundayand’s vote will result in the ruling AK Party securing a majority, which would ensure continuity, but without winning enough seats to boost the powers of President Recep Tayyip Erdogan, seen by critics as an increasingly authoritarian figure. But recent polls have suggested the AKP, which Erdogan founded and which he wants to push through constitutional change establishing an executive presidency, may have to form a coalition government. Analysts fear such an outcome could lead to policy paralysis or trigger fresh elections. The lira weakened as far as 2.7061 from 2.6895 late on Wednesday, also hit by gains in the dollar, which benefited from data pointing to a pick-up in the US economy. The Turkish currency has weakened nearly 14 percent this year, making it one of the worst performers among emerging market currencies. It was approaching its record low of 2.7435 which it hit on April 24.
Shares also came under pressure after two days of strong gains. andquotiven the uncertainty around the general election at the weekend, we donand’t expect the upwards momentum to be lasting after the positive trend in the BiST yesterday,andquot Oyak Invest said in a research note. The main Istanbul share index Borsa Istanbul (BiST) fell 1.82 percent to 81,876.35 points. Energy sector shares .XELT fell 3 percent after a bourse news website issued a story saying an unnamed company in the sector was facing financial difficulties. Akenerji, whose shares fell 5.4 percent, issued a statement linking the price move to an andquotirresponsible commentaryandquot on a website which it said had nothing to do with the firm. Aksa Enerji also denied that the website story was referring to it. Its shares dropped 3.8 percent, while Zorlu Enerji was 3.7 percent lower. andquotAkenerji and Aksa Enerji shares fell in response to the news,andquot said one analyst who declined to be identified. The benchmark 10-year government bond yield rose to 9.3 percent from 9.16 percent on Wednesday.

SOURCE: Today’s Zaman