#USDTRY @ 18.2181 to head higher towards 25 over the next 12 months – Danske Bank (Pivot Orderbook analysis)
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The Central Bank of the Republic of Turkey’s (CBRT’s) unexpected move to cut rates by 100 bps in August triggered a new bout of lira weakness with USD/TRY breaching the 18 level. Economists at Danske Bank think twin deficits and global financial tightening could push USD/TRY towards 25 in 12 months.
“We think the combination of global financial tightening, rising budget deficits and substantial refinancing needs at the private sector in the context of already-tight FX liquidity could push USD/TRY to 25 in the next 12M.”
“In the absence of a policy turnaround ahead of the June 2023 election, the burden on Turkey’s public finances will grow while growth momentum is slowing down.”
“In the longer term, Turkey’s economy could have a lot to gain (or lose) depending on how successfully it navigates the new geopolitical world order.”
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