Turkish lira weakens as polls give mixed picture on election

The Turkish lira slid against the dollar on Tuesday under pressure from global dollar gains and political uncertainty as another poll suggested the ruling AK Party may have to form a coalition government after a June 7 parliamentary election.
The lira has weakened 11 percent against the US dollar this year, making it one of the worst performing emergency market currencies, and stood at 2.6325 at 0949 GMT, down from 2.6162 on Monday.
A survey by Turkish pollster Andy-AR put the ruling Justice and Development Party (AK Party) support at 41.9 percent, the main opposition Republican Peopleand’s Party (CHP) at 25.8 percent, the nationalist MHP at 16 percent and the pro-Kurdish HDP at 10.7 percent, above the 10 percent threshold needed to enter parliament.
It was the third survey in a week indicating the AK Party might lose its parliamentary majority.
But another poll, by Konsensus on Tuesday, showed it capable of forming a single-party government with 43.9 percent support and the HDP on 9.7 percent. If the HDP falls short of the threshold its parliament seats will largely go to the AK Party.
andquotTurkish markets are recently performing slightly weaker than emerging market peers, as recent polls increased the odds of a coalition government,andquot said Erkin Isik, a strategist at TEB-BNP Paribas.
andquotHowever, a small decline in HDP votes, below the 10 percent national threshold would mark a continuation of one-party government, without power to change constitution, which will likely spur a positive short-term market reaction,andquot he added.
The surveys generally indicate that the election will push the President Recep Tayyip Erdoganand’s dream of an all-powerful presidency further from his reach, and usher in a period of turbulence as he seeks to maintain his dominance.
Shares were largely flat, with the main share index dipping 0.1 percent to 84,483.63 points.
Among shares in focus were newly crowned soccer champions Galatasaray, which tumbled 10.07 percent, having risen sharply earlier in the month in anticipation of its league success.
The benchmark 10-year bond yield rose to 9.28 percent from 9.18 percent on Monday.

SOURCE: Today’s Zaman