If the polls are correct, President Erdoğan will be elected tomorrow for another term in the second round of elections. This has significant consequences for the Turkish economy.
Markets want change and favor opposition leader Kilicderoulou as the next president. Not for nothing, when the polls were against it, the Turkish lira fell yesterday to a low of around 20 to 1 dollar and completed a decline of about 6.5% since the beginning of the year.
The hope is that Kilicderoulu as president will change direction and deal with the inflationary spiral that is weighing on households in Turkey. In April, an official figure was published that the inflation rate is 44%, but few in the markets believe this. Independent bodies claim that actual inflation hovers around 115%.
With Erdogan in power, the trend of continued weakening of the lira is expected until around 25-26 to the dollar at the end of this year. This is particularly bad news as the Turkish government is "burning" billions of dollars trying to stabilize the rate. In the two months before the elections, the central bank took out about 20 billion dollars from the foreign exchange reserves in an attempt to prevent a more serious deterioration of the exchange rate of the pound.
The hope is that someone around Erdogan will gather courage in the coming weeks and explain to the Sultan that in order to strengthen the Turkish lira, he must change direction and act to raise the interest rate instead of lowering it.