Turkey's political uncertainty temporarily relieved

Political uncertainty in Turkey has been reduced by the strong election of AKP, to which the market also reacted positively. Governance might not be so easy with the single party majority, but the government formation will likely be easy.

There would be medium term obstacles like two power centres emergence and polarization increase in society, which are likely to complicate policy making. The sovereign ratings outlook remains exposed to potential policy mistakes and a delay of normalization in politics. 

"We maintain our cautious view on TRY until we see concrete progress on the structural reform agenda and de-escalation of domestic political tensions. On monetary policy, political pressures likely resurface on CBT to be more pro growth; hence we expect easing in liquidity conditions in 2016 if exchange rate stabilizes", says Barclays in a research note.