TRY: Political rulings extend uncertainty - Commerzbank

Istanbul's 45th civil court last week ruled that a scheduled extraordinary congress to be held by CHP on 24 September could not be legally held. After appeals by CHP, YSK - which is supposed to have the final word on election matters - re-convened and re-authorised the congress. Later, the former Istanbul court, once again, rejected CHP's appeals and confirmed that Gursel Tekin remained trustee over the party's provincial organisation, Commerzbank's FX analyst Tatha Ghose notes.

Judicial clashes escalate in Turkey

"This means that, by the dictat of this authority, the interim judicial measures that had suspended provincial chair, Ozgur Celik, will stay in place, even though he was re-elected at the controversial 24 September extraordinary congress. In short, the political environment continues to be highly escalated: CHP's scheduled proceeding on 24 October now appears more vulnerable; and after parliament reconvenes in October, we could see accelerated prosecution action against CHP leader, Ozgur Ozel, himself."

"The developments underscore how lower courts are challenging higher authorities, using vetoes, and eroding the judicial hierarchy - the judiciary appears increasingly fragmented, which opens the door for further institutional clashes. Add to this President Tayyip Erdogan's meeting with US president Trump after which US ambassador Tom Barrack announced that 'President Trump gave Erdogan legitimacy and as a result, you will see major changes soon'."

"It is no surprise that lira depreciation is continuing at a rapid pace with persistent signs of daily FX interventions required. This results in stretches of sideways trading before fresh breaches weaker. Nothing in the latest developments suggests that the depreciation momentum will be able to slow, despite some relief in balance of payments fundamentals such as increased capital inflow and narrowing of the net open FX position of corporates."