Turkey goes to polls to elect its first executive president - TDS

TD Securities analysts share the three main scenarios they have worked out based on the most recent polls and assumptions for the general election that will take place in Turkey on Sunday, June 24th.

"Scenario 1 - STATUS QUO. Erdogan wins presidency and parliament majority through the AKP-dominated Republic Alliance. Probability: 45%. FX: USDTRY down to 4.55-4.60. Rates: Initial positive move with Xccy 1yr rates down to around 18.50%."

"Scenario 2 - COHABITATION. Erdogan wins presidency in the second round and with small margin, but the oppositions take full control of parliament. Probability: 45%. FX: USDTRY up 1.5-2% (around 4.80/4.81). Rates: Front-end (Xccy 1yr) remains elevated between 19.50-20%."

"Scenario 3 - REVOLUTION. Erdogan loses presidency in the second round and the oppositions take full control of parliament. Probability: 10%. FX: We guesstimate a sudden euphoric TRY reaction in the order of 3-5% to sub-4.50 (but the opposite is almost equally probable). Rates: Short-end rates (Xccy 1yr) fall to around 18-18.5% as initial reaction and the curve bull steepens."