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Turkish lira could collapse if Erdogan wins election

by LLB political Reporter
14th May 23 10:54 am

The Turkish lira could collapse if the incumbent Recep Tayyip Erdogan wins Turkey’s elections on Sunday and continues his presidency, warns the CEO and founder of one of the world’s largest independent financial advisory organisations.

The bleak warning from Nigel Green of deVere Group come as polls open in the country’s fiercely fought presidential and parliamentary elections that could mean the end to Erdogan’s 20-year rule.

His main opponent is CHP leader Kemal Kılıçdaroğlu, who represents an election coalition of six opposition parties. 

A candidate must win over 50% of the vote on Sunday evening in order to be elected. A failure to secure more than half the vote means Turkey will head to a run-off on May 28.

Nigel Green said, “The Turkish lira has been one of the world’s worst-performing currencies for a long time already. 

“Should Erdogan win on Sunday, we expect this downward trend for the currency to gain momentum, and it could face collapse within this quarter.

“This is because confidence in the crisis-stricken lira will be further eroded as the incumbent president would continue his highly unconventional monetary policy agenda, which sees Erdogan opining that raising interest rates increases inflation, instead of cooling it.

“Currently, the official inflation rate is just above 50%, but analysts believe it is actually higher than 100%.”

The chief executive of deVere Group, which offers 80,000 clients favourable foreign exchange rates, continues: “It’s likely that an Erdogan win will mean a significant and rapid devaluation of the Turkish lira, leading to a loss of confidence in its value and a decline in its purchasing power relative to other currencies. 

“A sharp decline in the exchange rate would likely be accompanied by hyperinflation, economic instability, and financial turmoil within Turkey.”

The last two years has seen Turkey’s currency plummet and prices rise considerably, triggering a cost-of-living crisis that has helped erode Erdogan’s conservative, working class base.

Kemal Kılıçdaroğlu, the opponent, is fighting as a unity candidate for six opposition parties, ranging from his own centre-left party and the nationalist Good party to four smaller groups, which include two former Erdogan allies one of whom co-founded the AK Party.

Green concluded, “The outcome of Turkey’s election will determine the trajectory of the country’s under-siege currency for years to come.”

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