TRY looks constructive in the longer run – Danske Bank

Following the recent elections, Chief Analyst at Danske Bank Jakob Christensen assessed the prospects for the Turkish currency.

Key Quotes

“On Monday night and early morning the TRY joined celebrations of Erdo ğan supporters, strengthening clearly against the USD to 4.60”.

“As we expected, Erdoğan’s victory in the first round combined with guaranteed majority of pro-Erdoğan forces in the parliament have become TRY positive. The President’s full mandate would mean that more fiscal austerity could be undertaken in 2018 already, while Turkey’s central bank could continue with current tight monetary policy in order to tame inflation and TRY’s volatility”.

“While the global EM sentiment remains negative for the TRY, long-term prospects could start looking brighter if the fiscal side improves and free floating regime is left to stabilise current imbalances. We expect the TRY to be extremely sensitive to political statements and possible protests related to the snap election results this week”.