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Tuesday, 9 July, 2002, 14:49 GMT 15:49 UK
Turkey's currency slumps
Bulent and Rahsan Ecevit
Mr Ecevit has been ill in recent months
Turkey's currency, the lira, has fallen to its lowest level yet after ministers resigned from Prime Minister Bulent Ecevit's government on Monday.

Four ministers and 22 other deputies handed in their resignation from the Democratic Left Party, the largest party in the three party coalition, raising the prospect of an early election.

The currency - which has been sliding during a three month long absence by Mr Ecevit - stood at 1,706,000 to the dollar in early trading on Tuesday.

The lira's fall was sparked by concerns that an early election could destabilise a $16bn (10.4bn) loan agreement with the International Monetary Fund (IMF).

Already, the Nationalist Action Party has raised the possibility of an election in November.

Debt burden

Turkey is the IMF's biggest debtor and it is unclear what this political uncertainty means for the country's programme with the American - based lender.

"The new government could potentially be both anti-IMF and market-negative.

"The market needs to be assured the new government would be market friendly but because of the election we cannot be sure," Dwyfor Evans, emerging markets analyst at Bank of America said.

Political instability also raises questions about Turkey's plans to join the European Union (EU).

Turkey needs to enact reforms before it can be considered for membership.

"We are at the climax of uncertainty," said Emin Ozturk, an economist at Bender Securities in Istanbul.

Early election?

The prime minister - who has been absent because of illness - has given no indication as yet that he will resign.

Mr Ecevit is now set to meet with Devlet Bahceli, head of the Nationalist Action Party - who called for an early election - later on Tuesday.

If the prime minister did resign, it is unclear what the next step would be.

One possibility would be for President Ahmet Necdet Sezer to appoint a prime minister designate to form a government.

The lira recovered in later trade on Tuesday to stand at 1,679,000 to $1.


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09 Jul 02 | Europe
25 Jun 02 | Europe
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