The Turkish lira remained in an uneasy calm on Monday as the vote tallying in the latest election continued. The USD/TRY exchange rate was trading at 19.60, where it has been in the past few days. This price is a few points below the record high of 19.75.
Erdogan vs Kilicdaroglu polls
The biggest forex news on Monday is the ongoing vote counting in Turkey. According to media reports, the preliminary numbers show that the country will likely move to a runoff because Erdogan and Kilicdaroglu have not clinched 50% of the vote.
CNN reports that Erdogan leads with a 49.35% of the vote compared to Kilicdaroglu’s 45%. In a statement, Kilicdaroglu said that he expects to win the election with 50% while Kilicdaroglu believes that he will win the runoff.
The performance of the USD/TRY pair implies that traders believe that Erdogan will extend his two-decade rule. If this happens, it means that the Turkish lira will continue slumping because of the lack of independence of the country’s central bank.
The Turkish lira has crashed by more than 880% since Erdogan became president in 2014. In all, it has fallen by more than 1,200% since 2002, making it one of the worst-performing currencies in the world.
Therefore, if Erdogan wins again, this downward trend will likely continue since he will maintain the status quo at the central bank. If there is a run-off, it will be held on May 28 and will lead to more consolidation for the Turkish lira.
The Turkish lira has been in a tight range in the past few months. Most recently, the USD/TRY pair hung tight close to the all-time high of 19.83. On the daily chart, the pair has moved slightly above the 50-day exponential moving average (EMA). At the same time, the Relative Strength Index (RSI) has moved to an extremely overbought level at almost 100.
Therefore, the pair will likely continue rising because of Erdogan’s lead in the polls. As I wrote in this article on Friday, the pair will likely rise to above 20 in the coming days if Erdogan wins. And these results shows that he might.
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