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German Commerzbank predicts steady path for Turkish lira

German Commerzbank predicts steady path for Turkish lira A Commerzbank logo is pictured before the bank's annual news conference in Frankfurt, Germany, February 9, 2017. (Reuters Photo)
By Newsroom
Jul 10, 2024 10:22 AM

Germany-based Commerzbank announced that it maintained its year-end forecast of 35 for the Turkish lira.

In a recent note, Commerzbank’s Emerging Markets Economist Tatha Ghose highlighted the stability of the Turkish lira following the Central Bank of the Republic of Türkiye’s (CBRT) decision to raise interest rates to 50%.

Ghose noted that inflation surprised on the downside for the first time in June, and the CBRT’s foreign exchange reserves have shown signs of recovery. He also pointed out that recent data from the United States has supported the lira and other emerging market currencies.

Despite these positive developments, Ghose expressed caution, maintaining a year-end forecast of 35 for the U.S. dollar to Turkish lira.

“President Erdogan and Finance Minister Simsek have reassured the market of their commitment to traditional economic policies,” Ghose stated.

“The CBRT management indicates that inflation will moderate in the coming months. This will be a critical test. If inflation superficially slows due to base effects but does not decrease at a fundamental level, policymakers could face a new confidence crisis. We maintain our ‘symbolic forecast’ of 35 for USD/TRY by the end of 2024.”

Last Updated:  Jul 10, 2024 10:22 AM