Azernews.Az

By Bloomberg

The Turkish lira fell to a record, extending this year’s loss to 12 percent, on concern elections in June will erode the ruling party’s majority and as the dollar rose on prospects for higher Federal Reserve rates.

The lira weakened as much as 1.1 percent to 2.6573 against the dollar before trading at 2.6525 at 1:57 p.m. in Istanbul. Turkey holds parliamentary elections on June 7.

“This is mainly off dollar strength,” Erkin Isik, a fixed-income strategist at Turk Ekonomi Bankasi in Istanbul, said by e-mail. “But the lira has been under-performing with political uncertainty approaching elections.”

The currency’s weakness reflects investor concern the parliamentary elections will produce a smaller majority for the governing AK Party and affect the nation’s ‘longer-term policy orientation,’’ Standard Bank Group Plc’s Chief Emerging Market Economist Timothy Ash said in an e-mailed note. Some opinion polls show the main Kurdish party, the People’s Democratic Party, has 10 percent of the vote, the threshold needed to enter parliament. That could undermine the AK Party’s plan to extend its 13-year rule as a single-party government.

The ruling party’s three-term limit will bar Deputy Prime Minister Ali Babacan, viewed by many as an integral part of the country’s economic management over the last decade, from running for parliament.