(Bloomberg) -- The Turkish lira is at risk of a 29% slump should President Recep Tayyip Erdogan, who clinched another five-year term, stick to his policy of keeping interest rates low.

That’s according to Morgan Stanley analysts including Hande Kucuk and Alina Slyusarchuk, who wrote in a Sunday note that the lira may reach 26 per dollar sooner than earlier expected and weaken close to 28 by the end of the year, without a change in policy direction. The currency closed at 19.97 per dollar on Friday, near a record low, before elections.

Erdogan’s unorthodox approach to interest rates — he believes lower rates lead to lower inflation — has left markets beholden to an unpredictable mix of ad-hoc regulations and interventions, with new measures introduced informally frequently. They’ve also sent overseas investors fleeing, with total foreign holdings of Turkish stocks and bonds decreasing by about 85%, or nearly $130 billion, since 2013.

“Without a change in the macro policy framework to prioritize disinflation and to adopt market-friendly policies, Turkey’s high external finance needs will likely keep macro risks alive, increasing sensitivity to global shocks (commodity prices, Fed) as well as the availability of FX inflows from regional partners,” the analysts wrote.

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