What to expect from the Turkey elections and how it will affect on TRY

Turkish President Recep Tayyip Erdogan seems to have broken, voicing uncertainty days before the Turkish elections. “The Erdogan Party can seek coalition relief if it does not secure a full majority in parliament after Sunday elections,” Erdogan said.

Polls indicate that election results may be more controversial than Erdogan’s expectations when summoning early elections in April. Since then, however, the Turkish president’s rating has dropped significantly, and this may lead to a second round of presidential elections, while the AKP losing a majority in the 600 local parliament.

“If we win more than 300 seats, we can look for a coalition,” Erdogan said earlier this week, expressing “confidence”, saying it was “very, very unlikely.”

Erdogan’s goal at the moment is to make Turkey a presidential republic. According to him, a stronger presidential system should be created after the election and be a guarantor of the fragmented coalition policies that prevented Turkish governments in the 1990s.

What to expect from TRY after the election?
Erdogan’s victory will surely trigger Kurdish terrorist groups that have been seeking an independent state for years on the territory of present-day Turkey. I expect mass protests against Erdogan’s policy, not excluding many terrorist acts in major cities, where Erdogan receives almost complete support. In summary, uncertainty in the country will rise significantly, and this will negatively affect TRY in the medium term.

In the case of Erdogan’s loss, I expect again uncertainty in the country, which will be caused by mass protests organized by the current president’s supporters. On the other hand, it is no secret that Erdogan, like Putin in Russia and Xi Jinping in China, is a strong backbone of the local business. Loss of Erdogan will seriously worsen business climate in the country, and this will add extra weight to the Turkish economy, respectively TRY.

Wherever we look at the situation, the prospects for TRY are extremely negative, regardless of the outcome of the local elections.

Source: Reuters

 Trader Petar Milanov

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