The Turkish lira opened higher across the board after uncertainty surrounding the constitutional referendum in the country dissipated. The camp led by President Erdogan won the vote narrowly, dividing Turkey, with the Eastern part of the country with major cities and the capital Ankara voting against a presidential republic.

Brokers are unlikely to have been martially affected by the USDTRY & EURTRY gaps, as the exchange rate changes are rather small when compared to similar political risks on previous occasions in other countries. As the market in Istanbul opened, the Turkish lira pared back some of its gains in what appear to be normal trading conditions.

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Some brokers increased margin requirements on currency pairs that include the Turkish lira and could start rolling back trading conditions to normal in the coming hours. The changes hinge on further volatility of the USDTRY and the EURTRY pairs, which are materially affected by the risk event.

A Divided Turkey

In what has been a very important political event in the history of Turkey, the country appears to be visibly divided on the matter of the powers of the President. Erdogan has been consolidating power for years and eliminating opposition rivals, but the European part of the country is resoundingly voting against the constitutional changes.

Erdogan is likely to have a hard time to consolidate his power further, as the opposition is preparing to contest the vote on grounds of manipulation. The current President’s win is far from convincing with 99.8 percent of the votes counted, tallying up to a lead for the “yes” camp with 51.4 percent.

Future volatility will depend on the ways in which Erdogan handles the transition from a parliamentary to a presidential republic. Civil unrest and terror attacks are two major risks that could derail this process. Brokers that are offering currency pairs including the Turkish lira should remain cautious on the upcoming risks.