Turkey will vote on referendum on Sunday, 16th April on constitutional changes which would replace their parliamentary system with an executive presidency that could grant President Erdogan new authority and transform Turkish politics.
A ‘yes’ vote on Sunday would empower Erdogan to appoint ministers, top officials and judges, dissolve parliament and declare emergency rule, but will bring Turkey closer to becoming an authoritarian state.
President Erdogan is already the most powerful leader since the founder of modern Turkey Mustafa Kemal Ataturk, and has won successive elections, enjoying strong support from conservative and religious voters, mainly in rural areas.
After last year’s coup crackdown in which more than 100,000 people were sacked or suspended over suspected links with terrorist organizations, President Erdogan is seeking for increasing his power.
While is supporters say that new powers are needed to stronger confront the Islamic state and Kurdish militants and root out all those behind July 2016 attempted coup, many liberal Turks are suspicious about such changes which would further erode the secular foundations of 80 million people country.
Voices from the European Union are also showing strong worry in scenario of Erdogan’s victory, which would further worsen already strained relations with the European Union and also risk killing Turkey’s stalled bid for membership of the Union.
Turkish lira is expected to face increased volatility after Sunday’s referendum. Vote ’yes’ would boost lira in the short-term, as it is already supported by recent dollar’s weakness. Lira may strengthen to 3.58 and 3.55, which marks key med-term support (currently holding at 3.67 zone).
On the larger picture, lira remains bearish against dollar and being in corrective phase from all-time lows during past few months.
On the other side ‘no’ vote is expected to put lira under increased pressure and risk weakness towards 3.78 zone initially, with stronger bearish acceleration to risk retest of record low of Turkish lira against dollar at 3.94, posted in January 2017.