Turkish lira at record low

LONDON - The Turkish lira hit an all-time low on Tuesday as focus shifted to President Recep Tayyip Erdogan's monetary policy plans following his election win.

The lira weakened over 1% to an all-time low of 20.34 against the dollar after Erdogan won Sunday's presidential election runoff, extending his rule to the third decade.

The currency has shed more than 90% over the last decade amid bouts of soaring inflation, triggered by Erdogan's unorthodox policy of cutting interest rates which has also put off foreign investors.

With Erdogan due to speak at 1100 GMT, market focus is now on whether he could now signal a shift to a more orthodox monetary policy and who he could appoint to the cabinet to run the country's economic policy.

"My personal belief is now that the election is out of the way, we will indeed see a policy shift simply because the current path is absolutely unsustainable. My bigger question is what's the magnitude (of the shift)?," said Elliot Hentov, head of macro policy research at State Street Global Advisors.

"The economy needs some harsh medicine and the question is, how much is he (Erdogan) willing to administer at this stage?"

Turkey's sovereign bonds rose as much as 1.6 cents on the dollar, while banking stocks jumped as much as 8.7%.

The Turkish central bank's net international reserves dropped more than $2 billion in the week to May 26, according to bankers.