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Turkey’s lira sinks to near record low as Erdogan is reelected



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A man holding a Turkish flag.Uriel Sinai | Getty ImagesThe Turkish lira sank Monday as incumbent Recep Tayyip Erdogan secured his victory in the 2023 presidential election, extending his rule into a third decade in power.The currency was trading at 19.97 against the greenback as of Monday 4 a.m. London time after slipping to 20 to the dollar earlier in the session.”We have a pretty pessimistic outlook on the Turkish Lira as a result of Erdogan retaining office after the election,” Wells Fargo’s Emerging Markets Economist and FX Strategist Brendan McKenna told CNBC’s “Squawk Box Asia.”McKenna forecasts that the lira will reach a new record low of 23 against the dollar by end of the second quarter, and then 25 as early as next year. It has lost some 77% of its value against the dollar over the last five years. He expects Turkey’s unorthodox monetary and economic policy frameworks to remain in place going forward. Turkey’s monetary policy places an emphasis on the pursuit of growth and export competition rather than taming inflation, and Erdogan endorses the unconventional view that raising interest rates increases inflation.”The current set up is just not sustainable,” said BlueBay Asset Management’s Senior EM Sovereign Strategist Timothy Ash via email.”With limited FX reserves and massively negative real interest rates the pressure on the lira is heavy,” Ash continued.Loading chart…The Istanbul stock exchange is set t …

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