New York April 14 2023: Turkey’s lira may decline 30% against the greenback from the current level, even assuming a policy normalization in the country after the elections slated in May, JPMorgan analysts expect.
“In a scenario of a strong commitment to orthodox macroeconomic policies, we expect USDTRY to peak at 24-25, amid elevated volatility, and bond yields to rise to 25%,” analysts, including Anezka Christovova and Michael Harrison wrote in note. “At such levels, we would consider it reasonable to turn bullish on Turkey’s local assets, expecting positive total returns thereafter,” they added.
Analysts also see a macro adjustment in the second half of the year, regardless of the outcome of the elections.
Lira was trading 0.2% down at 19.3661 per dollar as of 5 p.m. in local time, heading to a sixth weekly decline, the longest losing stretch since October.
“In a scenario of a committed return to orthodox inflation-targeting policies, we anticipate the central bank to hike the policy rate to 30% in the third quarter, from the current level of 8.5%,” they said.
