Turkey’s early election to decrease uncertainty, speed up reforms: Deputy PM Şimşek

ANKARA

Early elections will decrease uncertainties and bring forth opportunities to speed up reforms, Turkish Deputy Prime Minister Mehmet Şimşek said on April 18, after President Recep Tayyip Erdoğan called snap presidential and parliamentary elections on June 24. 

“With early elections, uncertainties will decrease, opportunity to speed up reforms will be born, a new and strong governing system will be realized,” Şimşek said on Twitter.

A similar comment was voiced by another top government official on April 19, as Deputy PM Bekir Bozdağ said that “early polls would positively affect the economy.”

“Early polls will positively affect the economy. The reaction given by markets to the news on early polls was quite positive. Early elections will boost the economy,” Bozdağ told state-run Anadolu Agency in an interview on April 19.

The Turkish lira, which has plumbed a series of record lows in recent weeks on widening concern about double-digit inflation, an escalating trend in the country’s current account deficit and a rise in geopolitical concerns, surged 2.2 percent on April 18 following Erdoğan’s announcement, according to Reuters data.

The currency was at 4.0285 to the dollar on April 19, weaker from the April 18 close of 4.0074, amid a rally in commodity prices, mainly in oil prices. 

Lira’s role? 

The currency’s record sell-offs may have figured in the call for early elections, according to some investors.

“A continued depreciation of the currency would likely negatively impact voter behavior and may jeopardize Erdoğan’s plans for victory,” said Paul Greer, a portfolio manager at Fidelity International in London, as quoted by Reuters.

“We read the early election announcement as a recognition from the government of a need for a tighter monetary and fiscal adjustment sooner rather than later,” he added.

Mainly driven by huge buys at Borsa Istanbul and dollar sell-off by local players, Turkey’s main stock exchange Borsa Istanbul also soared on April 18, adding 3.1 percent, its biggest one-day gain in a year. The banking and holding sector indices increased 4.64 and 2.25 percent, respectively. Among all sectors, the BIST mining index recorded the best performance with a 6.43 percent rise while the leasing factoring sector index fell by 0.46, making it the only sector to end the day down.