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Turkish lira strengthens after election result Turkish lira and stock market jump after election result
(about 14 hours later)
The Turkish lira strengthened against the dollar after Sunday's victory for the ruling Justice and Development Party (AKP). The Turkish lira and the Istanbul stock market rose sharply on Monday after the surprise win by the ruling Justice and Development Party (AKP) on Sunday.
The currency was trading at 2.8714 to the dollar, up 1.5% on Friday's close. The lira was up 3% against the US dollar to 2.817 in morning trading after falling by 25% this year.
Traders had been expecting a coalition government, so the prospect of a potentially more stable administration has boosted the currency. The main index in Istanbul jumped 5% in morning trading.
A coalition government had been expected, so the prospect of a potentially more stable administration has boosted confidence.
Turkey's political problems and signs of weakening economy had undermined the Turkish lira this year.Turkey's political problems and signs of weakening economy had undermined the Turkish lira this year.
Polls had indicated the AKP would receive only between 40-43% of the vote, in line with how it fared in June, when it lost its majority for the first time in 13 years. Polls had indicated the AKP would receive between 40% and 43% of the vote, in line with how it fared in June, when the party lost its majority after 13 years.
Attempts to form a coalition government after the June election failed.Attempts to form a coalition government after the June election failed.
Sunday's victory will allow the AKP to form a government on its own and will boost President Recep Tayyip Erdogan.Sunday's victory will allow the AKP to form a government on its own and will boost President Recep Tayyip Erdogan.
"Markets will likely appreciate a strong stable government," Timothy Ash from Nomura International told Bloomberg News. William Jackson, senior emerging markets economist at Capital Economics, said: "This has alleviated concerns about further political uncertainty, but it remains to be seen whether the party will try to regain its economic policymaking credibility that had slowly eroded over the past few years.
But, he said, there would be "concern over the lack of checks and balances" over the next administration. "The key for investors to look for is any sign that the AK party will try to regain its economic policymaking credibility."
FXstreet analyst Valeria Bednarik said: "This election will end Turkey's period of transition and should lead to a marked strengthening of the country's economy."
Economists want to know if the government has any fresh plans to boost the flagging economy.
Turkey's economy is expected to expand about 3% this year, below the government's official target of 4%.
Inflation, which hit 7% in August, is a growing concern for policymakers.
'Economic empowerment''Economic empowerment'
The BBC's Mark Lowen reported from Ankara that AKP supporters believe their party has brought Turkey "immense economic empowerment and has given the conservative religious side of this country a voice".The BBC's Mark Lowen reported from Ankara that AKP supporters believe their party has brought Turkey "immense economic empowerment and has given the conservative religious side of this country a voice".
While the AKP won a majority, it fell short of the amount of seats needed to call a referendum on changing the constitution and increasing the powers of the president.While the AKP won a majority, it fell short of the amount of seats needed to call a referendum on changing the constitution and increasing the powers of the president.
Economists will be keen to see if the government has any fresh plans to boost the flagging economy. Mr Erdogan has cracked down on opposition media groups. Shares in Dogan Holding, which owns newspapers, radio and television stations and is the subject of an investigation by prosecutors, fell nearly 10% on Monday.
Turkey's economy is expected to grow around 3% this year, below the government's official target of 4%. Shares in mining company Koza Ipek and its sister company Koza Metal also fell sharply.
Inflation, which hit 7% in August, is a growing concern for policy makers. The owner of both companies is close to US-based Islamic cleric Fethullah Gulen, a former ally turned enemy of the president. The firms have been under investigation regarding links to terrorism.