Turkey’s June 24 presidential and parliamentary elections, held 16 months ahead of schedule, produced no remarkable change in the country’s political topography. On the economic front, the climate of uncertainty that the elections had created is over, but economic visibility has not improved and the risks have not eased. For both domestic and foreign actors, the Turkish market remains fraught with unknowns, prone to surprises and far from inspiring confidence, as evidenced by vital indicators such as hard currency prices, interest rates and the risk premium for foreign investors.

The price of the dollar, which measures the pulse of the Turkish economy, was about 4 Turkish liras in mid-April, when President Recep Tayyip Erdogan called the early elections. Under the impact of both domestic and external negative factors, the dollar climbed to 4.9 against the lira in May, forcing the Central Bank to hike interest rates despite Erdogan’s longstanding pressure for lower rates.

In two months’ time, rate hikes totaling 5 percentage points brought interest rates to nearly 18%, but savings holders continued to shy away from the lira amid an unrelenting inflation that hit 12% in consumer prices and more than 20% in producer prices in May. More importantly, lack of confidence in the government has persisted among domestic and foreign actors alike, sustaining hard currency as a safe form of keeping savings.

The trend has changed little since the June 24 polls. The dollar’s price closed the first week after the elections at about 4.6 liras, reaching 4.7 liras occasionally during the week. This price is no different from the pre-election levels, suggesting that the polls and their outcome have contributed little to improving confidence among economic actors.