USD/TRY: Turkish lira will probably continue depreciation trend - Commerzbank


The Turkish lira has stabilized for now, notes Tatha Ghose, an analyst at Commerzbank, but they see USD/TRY at 5.25 by March 2019 and at 5.75 in December 2019.

Key Quotes: 

“There are four risk factors for the lira during 2019. 1) First, the macroeconomic situation will remain precarious for some more time: growth will be slow or negative because of the balance sheet effects of the 2018 crisis – we have not yet seen all the effects of the crisis on corporate debt, FX liabilities and balance sheet stress. Over the coming quarters, these effects are likely to come to the surface. This, in itself, can serve as a reminder to the FX market. But that is not all. 2) This is likely to result in government support  and bailout packages, as well as cheap lending schemes, which will amount to monetary easing via quantitative channels. 3) Third, pressure on CBT to lower rates outright will also be high – we see the policy rate being lowered to 15% by the end of 2019. 4) Finally, as growth begins to re-accelerate, we see Turkey’s long-term imbalances, for example the current-account deficit re-emerging next year.”

“We forecast a long-term weakening trend for the lira: we see USD-TRY returning to 6.00 levels by early 2020.”

“The Turkish economy recorded strong growth over the past couple of years; this momentum continued up to Q2 this year. But, growth slowed abruptly in Q3 as the lira crisis had its effect and most forecasters anticipate quarter-on-quarter GDP declines beginning Q3; some commentators forecast a hard-landing of the economy and ultimately resort to an IMF package.”

“The helpful effect from overall EM risk sentiment and from geo-politics may allow Turkey to muddle through next year. Our base case is for slow 1% growth next year but not an outright collapse.”

Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.

Feed news

Are you new to trading or have been trading for a while and you feel stuck?

Try with us!
Become Premium!
   

Latest Forex News


Latest Forex News

Editors’ Picks

EUR/USD remains sub-1.2100 after upbeat US data

US Producer Prices rose by more than anticipated, while unemployment claims shrank by more than anticipated. EUR/USD keeps trading below 1.2100 as investors eye firmer government bond yields.

EUR/USD News

GBP/USD under pressure below 1.4050 amid renewed USD demand

GBP/USD trades pressured below 1.4050, as the US dollar remains broadly bid amid risk-off sentiment. Rising inflationary pressures and Brexit jitters over NI keep investors on the edge. Bailey's speech, US data in focus.

GBP/USD News

XAU/USD bounces off weekly lows, lacks follow-through buying

Gold consolidates the heaviest losses in six weeks, fades consolidative bounce of late. Market’s struggle for clear direction after US CPI challenged Fed, US stimulus. Wall Street benchmarks dropped over 2.0%, down for third day, but S&P 500 Futures prints 0.10% gains afterward.

Gold News

Nightmares repeat as BTC flash crashes

The recent Bitcoin price crash seen on Wednesday is comparable to the one in late April. However, unlike the last time, this drop was not due to rumors of new tax proposals. 

Read more

S&P 500 Nasdaq: PPI confirms the CPI, Fed is in bed as inflation means red

Wednesday's wake-up call to the dovish Fed was repeated with the release of PPI on Thursday. Core CPI was 0.7% versus forecasts for 0.4%. Now is buy the dip still in focus and is don't fight the Fed still the trade? 

Read more

Forex MAJORS

Cryptocurrencies

Signatures