ANKARA
The Turkish lira has hit a new low against the U.S. dollar on Monday evening after coalition talks between the country’s Justice and Development (AK) Party's and the Nationalist Movement Party (MHP) ended without an agreement.
The Turkish currency fell to a historic low of 2.8677 against the dollar in late trading on Monday. Starting the day at 2.8350, the Turkish lira hit 2.86 in afternoon trading before the party leaders meeting at 2.00 p.m. (1100GMt) then rose to 2.8677 against the U.S. currency after the meeting.
The country’s Prime Minister Ahmet Davutoglu then announced that his Justice and Development (AK) Party's negotiations with the Nationalist Movement Party (MHP) ended without an agreement to form a coalition government.
The meeting came after talks between Davutoglu’s AK Party and the second-placed Republican People’s Party (CHP) ended without an agreement last week.
Analysts say the growing prospect of an early election will cause further decrease in the value of the Turkish lira against the dollar in coming days.
The Turkish Central Bank monetary policy committee is due to meet on Tuesday to decide whether to raise or lower interest rates. However, economists are forecasting the Turkish Central Bank to keep interest rates as they are.
When the deadline to form a government expires on next week either Turkish President Recep Tayyip Erdogan or the parliament may decide to hold a new election. If the president issues the decision, then polling is supposed to be held in the first Sunday following a 90-day period starting from the end of the first deadline.
In the current set of circumstances, this scenario suggests renewed polling in November. However, if the parliament makes the decision for a new election, then the Supreme Election Board can reduce this 90-day period by as much as half.
