After the determination of the election agenda and the appointment of the new economic management, the dollar started the first day of the week with a record of 21.15, and once again reached a new record of 21.26 after the announcement of inflation data by TURKSTAT. (“Turkish Statistical Institute” is the official statistical institution of Turkey, responsible for collecting, compiling, analyzing, and disseminating statistical data related to various aspects of the country, including demographics, economics, social indicators, and more.)
During the period when the presidential and parliamentary elections on May 14 and May 28 were on the agenda, the foreign exchange rate, which continued its volatility, also maintained its movement after the elections.
Yesterday, with the change in the economic management, the exchange rate of the dollar broke its historical record. The exchange rate, which reached its peak with the dollar at 21.15 and the euro at 22.99, continued its upward trend exponentially with the announcement of inflation data.
TURKSTAT announced the inflation data for the month of May. According to the first figures released after the election, the inflation rate for May was 39.59 percent. Additionally, the Consumer Price Index showed a monthly increase of 0.04 percent in May.
With the announcement of the inflation data, the dollar gained momentum and reached a level of 21.2644, marking a historical record.
In a note published over the weekend, Goldman Sachs said the choice of Şimşek ”increases the likelihood that monetary policy will shift towards a more orthodox direction.”
However, Şimşek’s appointment did little to calm forex markets as investors were also waiting to see if Erdoğan would change leadership at the central bank to match the finance minister’s stance.
Ten years ago the U.S. dollar would buy around two Turkish lira. Now the buck is worth more than 21 lira after international investors lost faith in Erdoğan’s stewardship of the economy as he challenged orthodoxy by claiming reducing interest rates was the way to combat inflation.