Azernews.Az

By Bloomberg

Turkey’s lira strengthened the most among emerging-market currencies as investors speculated political leaders would agree to form a coalition government.

The lira appreciated 0.7 percent to 2.6604 per dollar at 2:45 p.m. in Istanbul, its highest level since before the June 7 election. The currency had plunged the most since 2010 the day after the vote, in which the ruling AK Party failed to win a majority for the first time in 13 years.

A coalition government would avert the need for a fresh election in the $800 billion economy. This month’s results, and the ensuing political deadlock, sent the lira to record low and raised questions about the direction of economic policy in the country. Turkey’s President Recep Tayyip Erdogan on Wednesday urged political party leaders to form a coalition government as soon as possible.

“The markets seem to be giving more weight to the idea a coalition will be formed,” Erkin Isik, an Istanbul-based strategist at Turk Ekonomi Bankasi AS, said by e-mail. “The lira has underperformed other currencies since March, so the market is more inclined to react positively,” he said.

The currency weakened 12 percent against the dollar this year, the most among 24 emerging-market currencies after Brazil’s real, according to data compiled by Bloomberg.