It is widely anticipated that new governor Hafize Erkan will hike the base rate back to somewhere around 20%, from the current 8.50%. The accompanying commentary and other posssible changes to capital controls and FX restrictions will also have a crucial impact on sentiment and outlook. 

For some time, the Lira could be stable by itself because the upcoming policy environment is not known yet, which deters aggressive market positioning. But once the new policy parameters have become clear, we envisage depreciation pressure on the TRY to return.