Mubasher: The Turkish lira (TRY) surged against the US dollar opposition candidate Ekrem İmamoğlu secured a narrow victory in a rerun of mayoral race in Istanbul, and the government hinted that it would not appeal the result.

The Turkish currency jumped by 1.6% against the dollar to TRY 5.72 at 10:08 am in Istanbul (7:00 am GMT), paring losses incurred last week on fears that election could trigger more political unrest.

By 11:34 am GMT, the USD/TRY pair fell by 0.34% to TRY 5.7981.

In addition, Turkish stocks also rallied, with the benchmark BIST-100 index rising by 1.8% to 95,571 points.

Republican People's Party's (CHP) candidate Ekrem Imamoğlu on Sunday won the mayoral election with 54% of the vote, versus 45% for Justice and Development Party (AKP) Binali Yıldırım.

Imamoğlu’s decisive win ended a prolonged period of political uncertainty after the election board agreed to the government’s demand to rerun the vote, which initially won by the CHP’s candidate on 31 March. President Recep Tayyip Erdoğan congratulated Imamoğlu.

Investors are now expecting the government to initiate reforms to stabilise the economy.

Market focus will divert to Turkey’s relations with the US, with Washington reiterating last week its threat to slap sanctions on Ankara for purchasing Russian S-400 missile system.

In addition, ties with the European Union (EU) have been tense after Turkey proceeded with drilling for natural gas off Cyprus, a move which is considered illegal by Cyprus, Greece and the bloc.