The Turkish currency has fallen sharply against the pound in foreign exchange markets and investors have taken fright sending shares lower after a shock result in the country’s election.
The Turkish lira fell to an all-time low as it slumped 5.1pc to 4.2738 lira to the pound, and the Turkish index of 100 leading shares dived 6.3pc lower early trading.
At the start of the year £1 was worth 3.6 Turkish lira, and after the surprise election result holidaymakers money now goes 16pc further with £1 worth about 4.3 Turkish lira
Shares in Turkey’s 100 leading companies were down 4587 points to 77350 in Istanbul, wiping almost 32bn Turkish lira (£7.6bn) from their value. The Turkish index of leading shares is now down 9.8pc so far this year.
The slide occurred after preliminary results showed Turkey’s ruling Justice and Development (AK Party) lost its parliamentary majority for the first time in 13 years.
The country’s pro-Kurdish Peoples’ Democratic Party (HDP) passed the 10pc threshold of the national vote required to win seats in parliament.
The results based on 99.9pc of the votes counted show the AK Party won 41pc of the vote, giving it 258 seats in parliament, below the 276 seats necessary to form a majority government.
Salman Ahmed, Global Bond Strategist at Lombard Odier Investment Management, said: “Turkey is heavily indebted and has big external sector borrowing needs. This means any economic or political shock has an exaggerated impact on the Turkish lira.
“Looking ahead, expect the Turkish central bank to step up its support for the currency and even reverse course its current easing monetary policy until political clarity emerges.”
The main opposition party, the Republican People’s Party (CHP) won 25pc of the vote and 132 seats, while The Nationalist Movement Party won 16.5pc of the votes and 81 seats.
The Turkish lira was redenominated by the removal of six zeros on January 1, 2005, replacing the previous Turkish lira at a rate of 1 to 1,000,000.