FXStreet (Delhi) – Kit Juckes, Research Analyst at Societe Generale, notes that according to preliminary results, Justice & Development Party (AKP) triumphed in yesterday's vote, with the repeat ballot restoring its ability to form a single-party government (316 out of 550 seats). Key Quotes “The outcome trumps consensus views and the most optimistic polls, all calling for a narrower lead of AKP and renewed coalition talks.” “Popular support for AKP (49.4% vs. 40.7% in June) bounced back to the detriment of voter support for MHP and HDP. We largely assign this shift to the unprecedented surge in security threats over the past 4 months all resulting in an enhanced nationalist feeling and a general yearn for domestic security and stability.” “Although unexpected, AKP's victory may be the optimal election outcome for near-term economic and asset dynamics in Turkey. On the political front, the mid-way Parliamentary majority, short of the required 330 seats for referendum for constitutional changes, helps boost PM Davutoglu's political legitimacy and could hope to strengthen his dominance inside his party.” “The recent performance of Turkish assets already reflects a large amount of front-loaded effusion of optimism. Although surprising to most, AKP sweeping win and the resulting fast-track (and long-overdue) formation of a stable government could allow a short-lived test of the 200dma of 2.72 in USDTRY, and further outperformance relative to its high yielding peers (notably ZAR).” “We deem medium-term prospects for another AKP rule remain as challenged as ever. The party's track record of protecting democratic values has plummeted over the past months, and the consolidation of its dominance could worsen concerns over checks and balances in Turkey. Faced with prominent Fed hike fears, we expect local assets to resume responsiveness to threats over monetary policy independence.” For more information, read our latest forex news.