A reversal of fortunes for the Turkish Lira could be imminent – Wells Fargo

FXStreet Insights Team FXStreet

Economists at Wells Fargo discuss Turkish Lira (TRY) outlook.

Sentiment toward Türkiye can improve

To be clear, we still forecast a weaker Turkish currency over the course of our forecast horizon; however, we have scaled back the magnitude of that depreciation to reflect improving and more orthodox trends in policy.

After 21.50 percentage points of tightening, we are more confident that the direction of policy will be sustained and that sentiment toward Türkiye can improve, and foreign investor capital can follow in the near future.

We also believe credit rating agencies such as Moody's, S&P and Fitch may be close to upgrading Türkiye's sovereign credit rating, or at a minimum, revising outlooks to ‘positive,’ given the latest developments.

The story surrounding Türkiye is not quite outright positive just yet, and local political and geopolitical risks remain, but should the latest trends continue and credit rating revisions materialize, we could revise TRY forecasts as well.

USD/TRY – Q4-2023 28.50 Q1-2024 29.00 Q2-2024 29.00 Q3-2024 29.50 Q4-2024 30.00 Q1-2025 30.50

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FXStreet Insights Team

FXStreet

The FXStreet Insights Team is a group of journalists that handpicks selected market observations published by renowned experts. The content includes notes by commercial as well as additional insights by internal and external analysts.

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