USD/TRY to hover around 2.85 by end of 2015

In Turkey, ruling AKP returned to power with a bang at yesterday's general election: the party is projected to have won 312-316 seats out of the total 550, which translates to about 57% of Parliament seats, a far better outcome than predicted even by pro-AKP media. 

The party will, once more, be in a position to form a single-party government, albeit not change the Constitution (which would require 330 seats). The return of votes to AKP from Nationalist MHP and Kurdish HDP most likely represents the realisation by the electorate that splitting the vote in favour of smaller parties did not ultimately produce an effective mandate last time. 

"A return to single-party government is likely to produce a sharp market rally in the near-term as a functioning economic plan and budget will soon be unveiled. USD-TRY is likely to hover around 2.85 region by end-2015 - but, over the medium-term, concerns over policy interference, in particular at the central bank, and a general lack of checks and balances in Turkish democracy will likely re-surface", says Commerzbank.