19 Jun 2015
Politics will set the pace for TRY in the short term – TDS
FXStreet (Edinburgh) - Strategist Cristian Maggio at TD Securities assessed the upcoming scenario for the Turkish lira in light of the recent elections.
Key Quotes
“Following the June 7 general election in Turkey, the ruling AKP lost its absolute parliamentary majority, but remained the largest party in parliament”.
“In the short term, we see two-way risks with a high probability of events that can support stronger lira valuations and rallies in rates”.
“If a coalition is announced, especially a viable one led by the AKP with the MHP or the CHP (60% chance), we could see USDTRY down to 2.60/2.65”.
“Worst case scenario is snap election that could push USDTRY to above 3.00, possibly testing 3.30/3.35. The CBRT to deliver 300-400bp in emergency hikes”.
“Long term, Turkey’s outlook is still negative, suggesting a weaker currency beyond the short term possible relief rally”.
“With the focus still on politics, we recommend to trade the lira very opportunistically, buying into coalition rumours/announcements, but selling into sharp USDTRY corrections”.
Key Quotes
“Following the June 7 general election in Turkey, the ruling AKP lost its absolute parliamentary majority, but remained the largest party in parliament”.
“In the short term, we see two-way risks with a high probability of events that can support stronger lira valuations and rallies in rates”.
“If a coalition is announced, especially a viable one led by the AKP with the MHP or the CHP (60% chance), we could see USDTRY down to 2.60/2.65”.
“Worst case scenario is snap election that could push USDTRY to above 3.00, possibly testing 3.30/3.35. The CBRT to deliver 300-400bp in emergency hikes”.
“Long term, Turkey’s outlook is still negative, suggesting a weaker currency beyond the short term possible relief rally”.
“With the focus still on politics, we recommend to trade the lira very opportunistically, buying into coalition rumours/announcements, but selling into sharp USDTRY corrections”.