Recep Tayyip Erdogan has won Turkey's 2023 presidential election and secured another 5-year term in power. Yet, this wasn’t good news for the national currency. The Turkish lira took a deep nosedive following the announcement of the election results. Recently, it has reached a new record low, and its fall might not be over. Thus, analysts at Morgan Stanley predict a 29% slump in the lira’s value. Under Erdogan, Turkey’s economy has weakened considerably. The president has repeatedly interfered with the economic policy of the country by lowering rates, dismissing central bank governors, and replacing finance ministers. Naturally, such an approach is damaging to the economy and the Turkish lira which has completely lost investors’ trust. Therefore, if Erdogan sticks to his previous policy during the new term, the lira is set to depreciate further. According to Morgan Stanley, it can plunge to the level of 26 against the US dollar sooner than was earlier predicted. If monetary policy stays unchanged, the Turkish currency could easily plunge to 28 per dollar by the end of the year. Erdogan’s unorthodox approach to the economy, which implies keeping interest rates low to tame inflation, is the main reason behind the weakening of the lira. Since this economic experiment started in 2021, the Turkish currency has collapsed by almost three times. Meanwhile, inflation in Turkey remains steadily high, reaching 43.68% in April this year.
