Turkish Lira Sinks to Fresh Lows on Erdogan’s Victory

The Turkish lira fell to a record low as incumbent Recep Tayyip Erdogan won the 2023 presidential election, extending his reign into his third decade in power.

Markets are very well aware that Erdogan supports the “unconventional view” lowering (instead of rising) interest rates while facing increasing inflation. Turkey's monetary policy emphasizes the pursuit of growth and export competition rather than inflation suppression, and Erdogan supports the unconventional view that raising interest rates will increase inflation.

Being apparently spooked by such prospects, Turkish lira briefly touched 20.0608 against the dollar around 11 a.m. local time on Monday morning, breaking last week's lows. At the time of writing it is trading near 20.086/USD.

Some analysts predict the lira will hit a record low of 23 per dollar by the end of Q2 this year, and then hitting 25 as early as next year. The beleaguered currency has lost about 77% of its value against the dollar over the past 5 years. Many assume that Turkey's unorthodox monetary and economic policy framework will continue into the future.