On Friday, the 30th of March, the Turkish President Tayyip Erdogan said that a positive trend had been approaching on the Turkish Lira exchange rate, yet the trend had not yet reached an ideal level, apparently as an effort to uplift domestic sentiment ahead of Sunday’s (March 31st) local election.
However, analysts had been considering Erdogan’s optimism over Turk currency more of a political ground than financial. Besides, Erdogan also botched to mention the level he thought would have been ideal for Turkish Lira.
In fact, the fresh optimism on Turkish Lira outlook came forth, after JPMorgan Chase & Co., a multinational US lender wrote in a client note last week to hold on to a long-buy position on American dollar against Turkish Lira, citing that the Lira would become vulnerable following the local election.
Following the last week’s prediction of JPMorgan, there had been intense volatility on the USD/Turkish Lira pair throughout last week and the Turkish currency had weakened as far as 5.6750 against the American dollar, which eventually had brought back memories of last year’s currency crisis.
In the fear of a further devaluation of Turkish Lira following March 31st’s local election, both investors, mutual funds and financial institutions had been found purchasing American dollar, buoying the US Dollar’s position against Turkish currency.