Economy in Turkey:  Initial reaction from markets to election results, stock exchange, dollar, Euro, gold

As the local elections are finished now, the effects of the election results on the markets will be closely monitored. As the initial response, significant changes were not observed in foreign exchange rates; however, dollar prices rose to 32.5300 TL in illiquid transactions, while Euro prices hovered around 35 TL. With the rise in the price of gold per ounce, the price of a gram of gold reached a record high. The Istanbul Stock Exchange also opened with an increase of over 1%.

Following the local elections on March 31, 2024; the CHP (Republican People’s Party) won the 1st party position after 35 years, with the AK Party (Justice and Development Party) coming in 2nd, and the Yeni Refah Party (New Welfare Party) coming in 3rd. While changes in economic policies and management will be closely monitored post-election, economists do not expect any significant changes. President Recep Tayyip Erdoğan, in a balcony speech last night in Ankara, stated, “We will begin to see the results of our economic program, especially in terms of inflation, in the second half of the year.”

Moreover, the first reaction of domestic markets after the local elections was eagerly awaited. On the first trading day, there was no significant change in USD/TRY; Euro/TRY was under pressure due to the decrease in the Euro/dollar parity. The price of a gram of gold reached a historic high with gains in the price of gold per ounce. The Istanbul Stock Exchange also opened with an increase of over 1%.

POSITIVE START TO THE WEEK FOR THE STOCK MARKET

The Istanbul Stock Exchange started the first trading day after the elections with a 1.01% increase at 9234 points. The banking index also gained 1.72% at the opening.

While the stock market continued its rise, the banking index exceeded gains of over 3% during the day. As of 10:09 am, the BIST 100 index increased by 0.61%, while the banking index rose by 2.57% to 11,245 points.

LIMITED RISE IN DOLLAR / TL RATE

With the expectation of an increase in the dollar after the local elections, the demand for the dollar by citizens accelerated in recent weeks; all attention turned to the first transactions in USD/TRY after the elections. While the dollar price was at 32.3984 TL in the last transactions on Friday, it was at 32.4250 TL with a 0.13% increase in international markets where Turkish markets were closed.

The exchange rate was trading at 32.4226 TL in the domestic market opening, and as of 09:41 am, it was trading at 32.4256 TL with a 0.08% increase.

The dollar gained 3.73% in March compared to the previous week’s closing; since the beginning of the year, in the first quarter of 2024, it has increased by 9.56%.

Following the surprise interest rate hike by the Central Bank of the Republic of Turkey (CBRT) the previous week, the USD/TRY pair had rapidly declined, but it had reversed its direction in the following days.

Euro near 35 TL mark

Euro prices, which were at 35.0370 TL in the last transactions on Friday, were at 35.0367 TL in the first transactions in the shallow market after the elections. Euro is currently trading with a 0.04% decrease at 35.0262 TL. Meanwhile, the British pound is trading at 40.9825 TL.

The Euro/dollar parity is currently trading at 1.0786 with a 0.06% decrease.

RECORD START TO THE WEEK FOR GOLD

The price of gold per ounce reached 2265 dollars in the first transactions of the new week, setting a new all-time high, while it is currently trading at 2259 dollars with a 1.14% increase.

The price of a gram of gold, calculated according to the USD/TRY and gold per ounce, reached its historic peak at 2362 lira due to the rapid rise in the price of gold per ounce. Gram gold is currently trading at 2354 lira with a 1.24% increase.