TRY keeps the bearish view intact in the longer run – Danske Bank
|Senior Economist at Danske Bank Vladimir Miklashevsky keeps the bearish view unchanged on the Turkish Lira.
Key Quotes
“Turkey’s central bank (TCMB) surprised the markets with a 625bp hike of the one-week repo rate to 24.00%, which moved USD/TRY to new lower levels and helped EM FX across the globe. We expected a 300bp hike and Bloomberg consensus anticipated a 325bp increase. In its most recent statement, the TCMB signalled that ‘if needed, further monetary tightening will be delivered’. Given the continuing acceleration in inflation (+6.62pp to 24.52% y/y in September) and risks of more weakening in the TRY, another hike is possible in Q4 18, as the real rate has become negative”.
“We maintain our USD/TRY forecast levels. Given that we expect more tightening fromthe TCMB (both implicitly and explicitly), we see only a moderate rise in the USD/TRY in the long term. A rate hike in Q4 18 would boost TRY’s short- and medium-term prospects. However, we continue to remain bearish on the TRY in the long term and forecast the USD/TRY at the following levels: 6.00 in 1M, 6.40 in 3M, 6.90 in 6M and 7.50 in 12M”.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.