TRY: Stabilization at current levels before resuming appreciation - Wells Fargo
|Analysts from Wells Fargo, look for the Turkish lira to stabilize around its current levels before eventually resuming its appreciation against the dollar amid generalized greenback weakness.
Key Quotes:
"Real GDP growth in Turkey was 11.1 percent year-ago in Q3. The military coup that occurred in Turkey last summer, which disrupted economic activity, created a low base for the year-over-year comparisons."
“The Turkish lira rallied against the U.S. dollar for most of the year, but in the ast few months this currency appreciation has reversed course. The lira has depreciated against the dollar by more than 10 percent since early September. This currency weakness has helped spur continued acceleration in prices; inflation as measured by the consumer price index was 13 percent year over year in November. A monthly series on inflation expectations released by the central bank also ticked higher in December to its highest reading of 2017."
“The monetary policy committee of the Central Bank of Turkey will meet on December 14 against this backdrop. At its last meeting at the end of October, the Turkish central bank upwardly revised its inflation forecast by 1.1 points for 2017 and 0.6 points for 2018. Despite the faster inflation, the Bloomberg consensus does not anticipate the central bank hiking interest rates at the Thursday meeting. Slack in the labor market remains a challenge, as the Turkish unemployment rate was 10.6 percent in August, the most recent data available.”
“Our currency strategy team looks for the Turkish lira to stabilize around its current levels before eventually resuming its appreciation against the dollar amid generalized greenback weakness. If realized, a more stable lira would over time help bring down the faster inflation seen in Turkey of late and potentially provide a boost to consumers through an improvement in purchasing power.”
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.