Bloomberg
Published Apr 18, 2018 12:13
Updated Apr 18, 2018 15:21
Turkish Lira, Stocks Rally as Snap Election Reinforces Stability
(Bloomberg) -- Turkey’s lira and stocks rallied, leading emerging-market peers, after President Recep Tayyip Erdogan’s surprise move to call early elections fanned expectations for political stability and the end of expansionary fiscal and monetary policies that stoked inflation.
The lira rose 1.8 percent and the Borsa Istanbul 100 Index gained 3.1 percent, the biggest gain since November, as of 12:10 p.m. in New York. Government bonds in local and foreign currencies rose at least 1 percent.
"The rule of thumb for Turkey is that political stability is more important than anything else," said Jan Dehn, head of research at Ashmore Group Plc in London. "If Erdogan wins another term then stability -- better the devil you know -- is assured for the foreseeable future."
With an Erdogan victory almost certain in the June 24 vote, some analysts said authorities will have fewer incentives to continue accomodative policies that have led to rising prices and a deterioration in public accounts. The vote had been set for November 2019.
"Early elections could reduce the impetus behind sustained pro-growth policies and result in somewhat restrictive monetary policy becoming more palatable politically," said Alejandro Cuadrado, global head of foreign exchange at BBVA (MC:BBVA) in New York.
Here’s what analysts and investors have been saying:
Ashmore’s Dehn:
BBVA’s Cuadrado:
Edwin Gutierrez, head of emerging-market sovereign debt at Aberdeen Standard Investments in London:
Marcin Lipka, a senior analyst at Cinkciarzpl in Poland:
Anastasia Levashova, a fund manager at Blackfriars Asset Management Ltd. in London:
Cristian Maggio, head of emerging markets strategy at TD Securities in London:
Julian Rimmer, an emerging-markets trader at Investec Bank Plc in London:
Inan Demir, an economist at Nomura Plc in London:
Paul Greer, a money manager at Fidelity International:
Piotr Matys, an emerging-markets currency strategist at Rabobank in London:
Written By: Bloomberg
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