Last week, domestic markets followed a negative course with sales of Turkish assets and currency. Right after the launch of Turkey's Operation Olive Branch in northwestern Syria's Afrin to eliminate threats by the PKK terrorist organization's Syrian affiliate Democratic Union Party (PYD) and its armed Peoples' Protection Units (YPG), markets made a positive start to the week yesterday as uncertainty has waned and the expansive support of Turkish business figures has been voiced.

The Borsa Istanbul's benchmark BIST 100 index recorded a 0.43 percent increase and traded around 115.595 points during the early morning session. Moreover, the dollar closed the Friday session at 3.80 against the Turkish lira and hit 3.85 on Asian markets yesterday. But after the opening of domestic markets, the greenback lost ground and retracted to 3.80 in the morning session. The fact that the dollar index against a basket of six other major currencies also followed a depreciating course in international markets, hitting 90.155 points, has also limited negative impacts.

Analysts have said that the government's open and transparent communication with international bodies and parties both prior to the launch of the operation and during its course as well as the initial statements from international bodies have created a positive impact on the markets.

Considering the ultimate goal of the operation, the potential success will continue to create a favorable environment for Turkish markets, analysts have said. They have also said markets will closely follow the statements from authorities.

Ziraat Bank Economist Bora Tamer Yılmaz said that Turkey is conducting Afrin offensive within the framework of international law, informing the international community.

"Before the launch of the operation, Turkish authorities made necessary briefings to the national and international public. As the operation goes as planned, it will not impact the markets' volatility and achieving the goals will be positively perceived by the markets," Yılmaz said.

Denizbank Investment Services Strategy Director Orkun Gödek also drew attention to the fact that markets priced the risks last week and moderate statements from actors abroad have made the impact of the ongoing offensive on the TL-denominated markets relatively limited.

Strategist Cüneyt Paksoy said that the cautionary statements from the EU, NATO and the U.S. as well as the expectations that the operation in Afrin will be completed quickly have supported TL-dominated assets.

"The dollar-TL exchange rate has balanced around 3.80 and we think that this balance will continue unless the exchange rate hits 3.85 to 3.90. Moreover, the BIST 100 index had a rising start to the week and hit 116.300 points," Paksoy said.

He said that the proactive management of the Central Bank of Republic of Turkey (CBRT) and the economy administration taking necessary steps will be of great importance for markets. The news that will come from the operation and the statement from the international agencies will affect the markets, Paksoy said.

Integral Investment Research Director Tuncay Turşucu also said that the international community made no negative or aggressive statements. "The markets moderately reacted to the statements from the U.S. and Russia. No country accuses Turkey [of wrongdoing]. Considering these developments, the impact on currency markets has been limited," he said. Turşucu also said that the BIST 100 index opened with a rise, exceeding expectations. The pressure on the index and currency will be eliminated in the upcoming days unless negative developments occur.

Afrin offensive to have

limited impact on economy

Turkey's Operation Olive Branch against the YPG in Syria's Afrin region will have a limited impact on the Turkish economy and budget, the deputy prime minister in charge of the economy, Mehmet Şimşek, said.

Speaking at the signing ceremony between the Credit Guarantee Fund (CGF) and the Treasury, Şimşek said Turkey has a very strong budget, asserting that the operation will be conducted swiftly and that it will minimize the shocks resulting from terrorist attacks in Turkey in the future.

The Treasury guarantee protocol between the CGF and the Treasury was signed by Treasury Undersecretary Osman Çelik and the CGF Chairman Faik Yavuz with Deputy Prime Minister Mehmet Şimşek in attendance. Despite the operations and political-diplomatic developments, Şimşek said the government is sticking to its reform agenda and that new regulations will be done rapidly, adding that the Economic Coordination Committee met on Sunday and worked on three topics.

Şimşek also said that the credit guarantee limit of the Treasury-backed CGF is TL 55 billion for 2018, noting that the returns during the year will also be added to this limit. Announcing that there were changes in the protocol signed by the Treasury and CGF for 2018, Şimşek said TL 25 billion of the limit will be used for manufacturing and TL 15 billion will be used for exports.

Turkish business world shows

support for Afrin offensive

Members of the Turkish business world have also expressed support for the Afrin offensive. The support has been said to mitigate any pressures on the economy and markets.

Independent Industrialists and Businessmen Association (MÜSİAD) Chairman Abduraahman Kaan said that Turkey is using its national defense right articulated in Article 51 of the United Nations Conventions. "Turkey launched Operation Olive Branch in Afrin in order to eliminate a terrorist corridor along its borders as well as attacks on its hospitals and civilians. The operation is legitimate in all its aspects and the business world completely supports the offensive," Kaan said.

Turkish Industrialists and Business People Association (TÜSİAD) Chairman Erol Bilecik also said the association fully supports the Turkish Armed Forces in its fight against terrorism in a written statement and wished Operation Olive Branch will institute absolute peace and stability along the Turkish border.

Turkish Exporters' Assembly Chairman Mehmet Büyükekşi expressed confidence in the operation and said that Turkey intends to preserve the territorial integrity in Syria. The operation aims to cease threats to Turkey, Büyükekşi said, adding that it will eliminate threats to the safety, lives and property of citizens. Öztürk Oran, chairman of the Istanbul Chamber of Commerce (ICC), said: "The Turkish business fully supports the operation of the Turkish Armed Forces in Afrin." Citing the aim of the operation, Oran said the Turkish military's aim is to institute permanent peace for the oppressed Syrian people without allowing any terrorist corridor along its southern border. Oran also asserted that Turkey is exercising its right to self-defense ensued in international conventions.