Turkish lira firms after opposition wins Istanbul election

24.06.2019

The Turkish lira strengthened overnight after the opposition dealt a stinging blow to President Tayyip Erdogan by winning control of Istanbul in a re-run mayoral election on Sunday.

Assets have sagged since March amid uncertainty over how the vote might affect Erdogan's economic policies and concerns over strained relations between Ankara and Washington over Turkey's purchase of Russian S-400 defence systems.

One banker said the outcome had removed a source of political uncertainty and there was market optimism that the government would now shift its attention to the economic reforms that Turkey needs.

"This optimism could be limited or temporary as the S-400 issue and possible sanctions by the United States is still the most important risk element," the banker said who requested anonymity.

The lira firmed to 5.72 overnight after the outcome emerged, rallying from a close of 5.8140 on Friday. The currency stood at 5.7450 at 0613 GMT.

Ekrem Imamoglu of the Republican People's Party (CHP) secured 54.21% of votes, according to state-owned Anadolu news agency - a far wider victory margin than his narrow win three months ago.

Erdogan and President Trump are set to meet at a G20 summit in the Japanese city of Osaka on 29-30 June, in part to discuss the S-400s issue and the threat of U.S. sanctions. Investors have held out hope the leaders can find a solution despite Ankara's repeated assertions that it will accept delivery of the defence systems.    (Reuters)

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