Turkish lira (TRY) is depreciating following municipal elections held in Turkey.
Report’s analytical group says that TRY/USD rate rose by 0.2 points from 5.49 to 5.69.
Decline in confidence in TRY may be linked to investors’ uncertainty caused by elections. However, this is not the only reason. The currency reserves of the Central Bank of Turkey are reportedly decreasing. Though the Bank took certain steps to stabilize the exchange rate of the TRY before the elections, the investors don’t believe these steps to be continuous.
Dutch Rabobank strategist Piotr Matys believes that Turkey’s officials are surprising investors: "TRY was stabilized before the elections. However, the government interered in the marginal police. Was it worth it?"
By the way, budget expenditures are reportedly increasing. In the first quarter, the expenditures made up TRY 650 million ($115 million). Consequently, Turkey’s budget deficit in February stood at TRY 16.8 billion, up 8.85-fold from the previous year.
Report’s analytical group believes that Ankara will continue to provide support to TRY and TRY/USD rate will make at least 5.3.