Turkish assets firmed with global markets on Friday after international lenders approved a Greek austerity plan, but domestic political uncertainties which could scupper the new parliament held investors' focus. Turkey's pro-Kurdish Peace and Democracy Party (BDP) threatened to boycott parliament on Thursday, a move that might force by-elections. The new parliament is due to be sworn in on June 28.
"On the political front, tension escalates as the BDP party decides to boycott parliament. By-elections to be held in three months is a possibility," said Tera Brokers in a note. The lira closed firmer at 1.629 per dollar, gaining from Thursday's 1.6360, its weakest since April 2009. The benchmark February 20, 2013 bond yield fell to 9.13 percent after rising as high as 9.29 percent on Thursday.
Turkey's election on June 12 had originally yielded what investors called the "ideal scenario", with the ruling AK Party winning a third term but without the requisite number of seats to change Turkey's constitution without working with other parties. Prime Minister Tayyip Erdogan's AK Party won 326 seats in the 550-seat parliament, short of the 330 it needs to call a referendum on plans to reform the constitution. The Kurdish Peace and Democracy Party, which won 36 seats, said it would not attend parliament unless an elected deputy barred from parliament was allowed to take his seat.
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