(MENAFN- The Journal Of Turkish Weekly) As election results indicated the ruling Justice and Development (AK) Party was the winner of Sunday's general election, the Turkish lira hit record low against the dollar and the stock exchange plummeted about 10 percent on Monday.
The lira fell to 2.799 against the dollar in early hours of trading, then fell back to about 2.78 on Monday morning.
The Turkish stock exchange Borsa Istanbul plummeted 8.15 percent in opening session. Then it recovered a little to a loss of about 6.10 percent in early trading hours.
"Currently there are two issues that are moving the markets. First is the uncertainty due to election results. Coalition possibilities, and consequent economic policy is important for the markets. These are downside risks for Turkish lira assets," Destek Securities Analyst Adnan Cekcen said.
"But there is also a second issue. The central bank announced early this morning that foreign exchange deposit rates were lowered. This is a move intended to increase foreign exchange liquidity. Markets reacted, but more than that markets perceived this move as a sign that the central bank is in the game again," he added.
The bank announced on Monday that the deposit interest rate for the dollar was reduced to 3.5 percent from 4 percent and the rate on euro deposits to 1.5 percent from 2 percent.
Cekcen said: "From now on there is a possibility of a rate hike from the central bank. A monetary policy meeting will be held on June 23. So although we price lira assets negatively for now, we will pay close attnetion to the central bank."
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