Turkish lira surges after Erdogan party returns to power

The Turkish lira surged against the US dollar on Monday after President's Recep Tayyip Erdogan's Justice and Development Party (AKP) was returned to power in a surprising weekend election victory.

The lira was quoted at 2.78 to the US dollar in early trade, up 4.4 percent, around its highest level in seven years.

Sunday's election saw the AKP win back its overall majority in the Turkish parliament, paving the way for one-party rule once again after months of instability following an inconclusive vote in June.

The AKP won almost half the vote, giving it around 315 seats in parliament, and is now set to rule Turkey until 2019.

"The Turkish lira could now see one of its strongest periods, moving closer to two per dollar down from three," wrote FXstreet analyst Valeria Bednarik in a note published by the Anatolia news agency. 

"This election will end Turkey's period of transition, and should lead to a marked strengthening of the country's economy."

Turkey's economic growth slid to less than three percent last year after levels around 10 percent five years ago, and the lira had tumbled around 25 percent since the start of 2015.