Tuesday

13th Apr 2021

Turkish markets hit by election results

  • Istanbul stock exchange lost almost 6 percent and the Turkish Lira hit a new low on Monday because of political uncertainties. (Photo: tayfun)

Turkey faced a near market crash on Monday (8 June) after ruling Justice and Development Party (AKP) failed to win a majority in Sunday's general election, raising fears about the country's political stability.

The Istanbul stock exchange opened with an 8 percent loss Monday morning and lost almost 6 percent at the close, while the Turkish Lira lost 5 percent and reached a new low, at 2.75 Lira for 1 Dollar and 3.11 for 1 Euro.

Read and decide

Join EUobserver today

Become an expert on Europe

Get instant access to all articles — and 20 years of archives. 14-day free trial.

... or subscribe as a group

The Lira's fall was contained by Turkey's central bank's decision to cut foreign exchange deposit rates. But the country's currency, which already lost 15 percent to the dollar since the start of this year, could remain under pressure in the coming weeks.

Yields for Turkish bonds also went up, with the 2-year bond going past the 10 percent threshold.

Markets reacted negatively to the elections results that left president Erdogan' AKP with no majority for the first time since 2002 and no obvious coalition partner.

The pro-Kurdish Peoples' Democratic Party (HDP), which won 80 seats and came out as the election's main winner, has ruled out any coalition with the AKP.

The Nationalist Movement Party (MHP) is considered to be the most likely coalition partner for the AKP, but the AKP could also try to continue to rule with a minority government.

Prime minister Ahmet Davutoglu, who is due to meet Erdogan on Tuesday, will have forty-five days to form a government and new elections are not ruled out.

The period could create instability for an Turkish economy that benefited much from Erdogan's rule and AKP links with business.

The economy needs to diversify from construction and basic goods to higher-value goods and a more open financial system but investors say this evolution requires a stable political environment.

The political uncertainties could also weigh on relations with the EU, Turkey's top import and export partner.


In a statement Monday, EU chief diplomat Federica Mogherini and enlargement commissioner Johannes Hahn said that "the coming period offers opportunities for further strengthening the EU-Turkey relationship".

On Turkey's stalled EU membership negotiations, a commission spokesperson said: "You’re aware of the parameters on our side,” adding that “it will be for the new Turkish government to take this forward.”

Analysis

Erdogan down but not out

Turkey’s voters have shown they don't want to be ruled by one man, slowly shifting away from Europe.

Turkish voters snub Erdogan

The AKP party has lost its majority in Turkey, putting the brakes on president Erdogan’s plan to consolidate power.

Interview

Does North Macedonia really exist?

Its language and history give North Macedonia its identity for president Stevo Pendarovski, but, for Bulgaria, neither of them are real, in a dispute holding up EU enlargement.

Spain to recognise Kosovo if it gets Serbia deal

Spain would be prepared to recognise Kosovo if it clinched a deal with Serbia, Madrid has said, in the first positive signal of its kind since EU-brokered talks resumed.

News in Brief

  1. Putin refuses to talk about military build-up, Ukraine says
  2. EU bank to help Greece manage corona-recovery funds
  3. Johnson & Johnson vaccine deliveries to EU begin
  4. EU sanctions commander of Iran's Revolutionary Guard
  5. UK opens investigation into ex-PM Cameron lobbying
  6. 'Significant differences' in EU-UK talks on Northern Ireland
  7. Bulgarian PM reveals price rise in new EU-BioNTech deal
  8. Biden sending envoy to Brussels

Opinion

Montenegro's membership can inspire the European Dream

Today (15 December) I come to Brussels with a simple purpose: to present the credentials of my country, Montenegro, to become the next member state of the European Union, writes prime minister Zdravko Krivokapic.

Interview

Does North Macedonia really exist?

Its language and history give North Macedonia its identity for president Stevo Pendarovski, but, for Bulgaria, neither of them are real, in a dispute holding up EU enlargement.

Stakeholders' Highlights

  1. Nordic Council of MinistersDigitalisation can help us pick up the green pace
  2. Nordic Council of MinistersCOVID19 is a wake-up call in the fight against antibiotic resistance
  3. Nordic Council of MinistersThe Nordic Region can and should play a leading role in Europe’s digital development
  4. Nordic Council of MinistersNordic Council to host EU webinars on energy, digitalisation and antibiotic resistance
  5. UNESDAEU Code of Conduct can showcase PPPs delivering healthier more sustainable society
  6. Nordic Council of MinistersWomen benefit in the digitalised labour market

Latest News

  1. How the pandemic became an EU goldmine for crime
  2. China responds to 'low-efficacy' vaccine fears
  3. Merkel party chiefs support Laschet's chancellor bid
  4. EU refuses to bail out Montenegro's China loan
  5. Industry lobby to 'co-decide' on nearly €10bn EU public money
  6. Why Ursula von der Leyen won't go
  7. Incorporating gender in trade policy to benefit all
  8. Does Italian regionalism actually work?

Join EUobserver

Support quality EU news

Join us