USD/TRY expected to rise above 9.00 in the third quarter – MUFG

Matías Salord FXStreet

Analysts at MUFG Bank see the Turkish lira depreciating further versus the US dollar. The project USD/TRY at 9.50 by the end of the third quarter and at 9.25 by year-end.

Key Quotes:

“The surprise decision to sack former Governor Agbal has abruptly undermined the hard fought efforts to regain investor confidence and triggered renewed capital outflows which had been the norm in the years prior to Agbal’s appointment. Whilst our expectations are that the changing in CBRT leadership will result in the start of an accommodative monetary policy cycle we do not have a strong conviction on the timing of its commencement, which is data dependent and conditional on movements in the currency and Turkish risk assets.”

“We price in the reversal of the latest 200bps hike in Q2 2021. A faster pace of CBRT policy reversal will encourage a sharper lira sell-off. In light of these negative developments, we now expect the lira to hit new record lows in the year ahead.”

Author

Matías Salord

FXStreet

Matías started in financial markets in 2008, after graduating in Economics. He was trained in chart analysis and then became an educator. He also studied Journalism. He started writing analyses for specialized websites before joining FXStreet.

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