Türkiye's opposition plots battle against Erdogan

Türkiye’s opposition plots battle against Erdogan

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The second phase of the campaign is underway amid turmoil in the Turkish market, which has seen the lira close to historic lows against the dollar.

Investors are starting to value Erdogan’s victory and the long-term continuation of his unorthodox economic policies.

The cost of insuring Turkey’s debt risk is rising amid fears that the country’s once-vibrant banking sector could soon face serious difficulties.

Erdogan’s decision to force Turkey’s central bank to fight historically high inflation with low interest rates has put unprecedented pressure on the lira.

Analysts believe Erdogan tried to boost the lira ahead of the election through indirect market interventions, which drained Turkey’s hard currency reserves.

His government also introduced rules that required banks to buy more lira with their foreign currencies.

Some analysts have warned that Turkey may have to impose capital controls if Erdogan – who has promised to keep interest rates low while in office – does not change course.

“After the election, our focus will be whether the policy mix becomes more credible and coherent,” said ratings agency Fitch.

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