ISTANBUL: The Turkish lira gained on Monday after Prime Minister Tayyip Erdogan won the country's first presidential election, as investors took his victory as a sign of continuity.
Attention is now turning to the appointment of a new prime minister and economic management team. Markets will be looking for any changes among the main figures on the economic team, such as Deputy Prime Minister Ali Babacan, analysts said.
As prime minister, Erdogan has overseen a decade of growth and stability after a long period of economic chaos and political drift. Babacan, as economics minister, helped to ensure the success of the AK party's 12-year rule.
The lira firmed to 2.1399 against the dollar by 0553 GMT, from 2.1601 late on Friday.
"We expect that the market will refocus on the composition of the Cabinet, with the absence of key figures such as Ali Babacan - well-regarded by market participants and thus far central in the promotion of sound economic policy in Turkey - likely to catalyze a marked deterioration in Turkish assets on investor concern over the future trajectory of economic policy-making," Phoenix Kalen, a London-based strategist at Societe Generale, wrote by e-mail on Monday." But in the long term there are concerns about concentration of power in the hands of a sometimes impulsive leader and the erosion of key checks and balances in the system.
Erdogan has vowed to exercise the full powers granted to the presidency under current laws, unlike his predecessors.
"The presidency has until now been a largely ceremonial position, but it seems that Mr. Erdogan will seek to concentrate more power in the role. If this happens, his victory could lead to a more belligerent and unpredictable policymaking environment," said William Jackson, Capital Economics emerging markets economist.
"In time, a deterioration in the predictability of policymaking and, more generally, institutional standards in Turkey would deter investors and make it more difficult to attract capital inflows."
Comments
Comments are closed for this article.