USD/TRY to slip below 7.00 in 2021 – Rabobank
|Economists at Rabobank forecast a stronger Turkish lira in the next year and expect the USD/TRY to dip below the 7.00 level.
Key quotes
“Turkey will impose a 4-day curfew between December 31 and January 4 to slow down the pace of infections. The curfew will essentially prevent Turks from celebrating the New Year in big groups in order to reduce the risk of a third wave.
“Turkey avoided tough sanctions for purchasing the Russian S-400 defence system. President Trump – under pressure from the US Congress – opted for relatively soft measures. The measures are relatively mild and equally important for the lira and local assets the initial response from the Erdogan administration has been fairly measured.”
“We remain of the view that the lira has the potential to regain its bullish momentum as the sanctions are soft and ease pressure on President-elect Biden to take immediate action against Turkey when he moves into the White House next year. The notion that Biden may refrain from escalating diplomatic tension with Turkey at the very early stage of his presidency is still valid. This is an important element of our cautiously optimistic view on the lira on the 12-month horizon. We anticipate USD/TRY to fall below 7.00 next year.”
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