Turkish stocks rise and the lira declines after the election results

On Monday, Turkish stocks experienced a notable increase while the lira saw a slight decline after reaching its lowest levels ever against the dollar following the opposition’s significant victory over President Recep Tayyip Erdogan’s Justice and Development Party (AKP) in local elections.

Analysts attributed the AKP’s electoral setback to factors such as a high inflation rate nearing 70 percent, slowing economic growth, and an aggressive monetary tightening campaign that resulted in elevated borrowing costs.

The benchmark BIST 100 index surged by over 1 percent at the market open, with the banking stock index also posting a notable increase of 1.7 percent. As of 0730 GMT, the two indexes had risen by 0.63 percent and 2.12 percent, respectively.

In currency markets, the lira briefly touched the 33 level against the dollar during Sunday night trading, reflecting the initial reaction to the election results amid very weak liquidity. However, by 0730 GMT, the lira had retreated to 32.43, slightly below Friday’s closing level. It’s worth noting that many global financial markets were closed on Monday due to the Easter holidays.

Meanwhile, Turkey’s five-year credit default swaps, a measure of investment risk, decreased, and bond yields also experienced a slight decline.

The nationwide election results marked a significant electoral setback for Erdogan and the AKP, representing the most significant blow to the ruling party in over two decades of its governance.