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“Today Turkey’s president-elect Recep Tayyip Erdogan has been sworn into office. Later today (at 21:30 Turkey time), Erdogan will announce the composition of the cabinet – an event markets will closely watch,” TD Securities analysts note.

“The lira has rallied for most of the day anticipating market-friendly cabinet members. The focus will be on the economic cabinet – should it feature the likes of Mehmet Simsek or Ali Babacan, Deputy PMs in various previous administrations, TRY could receive further support in the short term.”

“However, news reports of a presidential decree published today, which makes changes to the central bank law, in particular regarding the term of the governor and the appointment of deputy governors.”

“The decree removes CB law Article 25 that fixes the CBRT governor’s term of office (5 years). For deputy governors it removes the clause stipulating that their appointment is a “joint decision and with recommendation of the governor”, along with the 10-year experience requirement and prohibitions on engaging in trade or having stakes in banks or companies.”

“USDTRY jumped 2% up to 4.6140 on the news, but is now recovering. Yet, adverse TRY moves may follow if CB independence is compromised.”