USD/TRY seen at 3.85 in 6-month – Danske Bank

Senior Economist at Danske Bank Vladimir Miklashevsky expects the Turkish Lira to depreciate towards the 3.85 region vs. the buck.

Key Quotes

“Inflation rocketed to double-digit territory (10.1% y/y) for the first time since early 2012 as the TRY’s weakness moved into consumer prices. Turkey’s central bank (the TCMB) kept its policy rate unchanged at 8.0% in March as we and consensus expected. Late liquidity lending rate was expectedly raised by 75bp to 11.75%. We expect the central bank to keep its key rate unchanged in the near future due to pressure from the government, while continuing to tighten liquidity for local banks providing largely FX repos to stabilise the TRY further”.

“We keep our USD/TRY short- and mid-term forecasts at 3.55 in 1M, 3.70 in 3M, and 3.85 in 6M, while cutting the long-run to 3.90 in 12M from 4.50 previously on a less hawkish Fed”.