Cabinet announcement drives TRY in upward trajectory

TRY surged at the end of last week, following the new government unveiling its new cabinet in this week, albeit within the context of sharp hikes, this move should be viewed, also by other emerging market currencies in last week.

There was recedence and positivity in the market, pushed by the market driven by media speculations about politics. The thrust of policy is to be defined by the President Erdogan and his followers. Therefore more pro-growth policies and a central bank which paves the path by monetary easing.

If the President decided to leave the decision of the economy to the original team, it would be another matter, which is unlikely. Once certain familiar faces are nominated, the old system will simply continue, would be naive. 

"His many remarks over the past year have made it clear that he views the performance of the previous two years - especially the lira's performance - as a failure of the old economic management team and CBT", says Commerzbank in a research note.