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.