On Tuesday, the Turkish lira extended the significant losses of the previous day after the election decision. In the late morning, up to 20.35 lira were paid for one US dollar. This means that the Turkish currency has lost just over one percent of its value since the previous day. Since Sunday's election decision, the price losses have added up to around 2 percent.
The Turkish currency was also under pressure in trading with the euro on Tuesday. At times, 22.35 lira were paid for one euro, more than ever before.
Turkish President Recep Tayyip Erdogan had won the decisive run-off election in the presidential election against opposition leader Kemal Kilicdaroglu. According to foreign exchange expert Ulrich Leuchtmann of Commerzbank, further losses in the lira cannot be ruled out after the election decision.
"It was all too obvious that the lira's exchange rates were not market-driven lately, but the Turkish currency was artificially propped up," Leuchtmann said. In Turkey, capital controls have been introduced, which have supported the exchange rate of the domestic currency in recent months. Leuchtmann sees the risk that the Turkish lira will no longer be artificially supported with the same vehemence as it was before the election. It cannot be ruled out that the devaluation pressure that has accumulated in recent months could be discharged. In recent months, the weak lira had also led to a sharp rise in inflation, which at times had risen above the 80 percent mark.
"Unless it is foreseeable that monetary policy will change, it is not to be expected that Turkey will get its inflation problem under control," Leuchtmann warned. In the past, President Erdogan had repeatedly spoken out in favour of falling interest rates in the fight against high inflation and exerted pressure on the country's central bank. This contradicts the conventional wisdom that high inflation is combated by higher interest rates.