15.05.2023 – It looks like President Recep Tayyip Erdogan will remain in power. At any rate, according to the votes counted so far, he is leading ahead of his challenger Kemal Kilicdaroglu. However, he probably fell short of an absolute majority. A runoff election is likely. The Turkish lira is twitching nervously, and the downward trend continues.

The election has strengthened the downward trend of the lira, albeit still in small steps. Vola picked up compared to trading a week ago, as you can see in the hourly chart of USDTRY.

Source: Bernstein Bank GmbH

The trend lately has been: The old president is the new one. And with that, the destruction of the currency could continue. Because Erdogan believes that lower interest rates will eliminate inflation. They should signal that everything is fine and encourage investors to venture into new projects because credit is cheap.

More Erdoganomics
With Erdoganomics now looming further – low interest rates with hyper-inflation – many Turks are likely to move their money to safety. Gold, dollars, euros, just get out of the soft currency. And foreign investors are likely to think twice about setting up new companies in the country.
Because the future could be worse than feared. Interestingly, there is definitely dissatisfaction among voters. Erdogan’s party, the AKP, for example, probably suffered its worst result since its first election in 2002, with around 35 percent. But it still remains the strongest party. However, the social democratic CHP did not benefit from the losses.

Islam instead of Europe
Rather, voters turned to the radical right, further darkening the economic outlook. Thus, other parties in Erdogan’s alliance gained, such as the MHP. This party, according to the Federal Agency for Civic Education, promotes the idea of “Turkey as a regional power that should become the center of attraction for the Turkish and Islamic worlds.” The Islamist splinter party YRP also made gains.

The right-wingers will take their toll as majority procurers if Erdogan remains in power: For example, the Sharia-compliant marriage of children is being discussed. This is likely to further boost overpopulation in the future and put a strain on the social systems. But it does not necessarily make the country attractive for Western-oriented companies, and certainly not for female managers who have to fear for themselves and their families. Headscarves instead of cash flow, so to speak. This raises the question of whether Turkey belongs in Europe or whether it would be better to join the Arab League or a confederation with Iran or other wonderful countries.

Our conclusion: It will now be exciting again on May 28, when the runoff election is likely to be held. If the mood turns and a pro-Western president with a solid monetary policy is elected, there is hope for the Turkish lira. Otherwise, the currency will be a meal for the bears. We are curious how it will continue – Bernstein Bank wishes good luck!


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You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.