There is nothing to suggest that the Lira will not weaken – Commerzbank
Things look to be shaping up for a tumultuous month ahead for the Turkish Lira, economists at Commerzbank report.
Lira in jeopardy as opposition dreams fade
“Erdoğan performed much better in the elections than polls had suggested. He did not receive 50% of the votes which is why there will be a second round on 28th May. He was nonetheless well ahead in the elections compared with his main opponent Kemal Kılıçdaroğlu.”
“Now that the prospect of a possible change in politics is no longer realistic, the depreciation pressure is likely to increase considerably. Whether it will be possible to prevent a significant slide in the Lira? One cannot be certain. That it will happen afterwards is getting increasingly likely. Even more significant control of capital movement would be the alternative. That alternative scenario possible, but would cause even more significant damage.”
“The prospects for the Lira are not rosy under either scenario: under one there will be significant depreciation, under the other no TRY exchange rates at all (at least not in the actual sense of the word).”
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FXStreet Insights Team
FXStreet
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