The Turkish lira weakened to near the 16.8 per USD level, depreciating from the three-week high of 16.1 touched on June 27 as fresh CPI data confirmed expectations that prices continued to accelerate. Annual inflation in Turkey rose to 78.6 percent, the highest in nearly 24 years, underpinned by a 150 percent surge in energy costs. The lira remains as the worst performing currency among emerging markets year-to-date, pressured by the world’s largest negative interest rates when considering inflation and steep current account deficits. The Turkish central bank left its interest rates unchanged in the last meeting, despite pledges by President Tayyip Erdogan’s pledge to continue slashing borrowing costs to resume the 500bps in interest rate cuts that took place between August and December of 2021. Harsh stabilization measures by the central bank and efforts to balance reserve levels have done little to offset negative borrowing costs.
Historically, the Turkish Lira reached an all time high of 18.46 in June of 2022. Turkish Lira - data, forecasts, historical chart - was last updated on July of 2022.
The Turkish Lira is expected to trade at 17.64 by the end of this quarter, according to Trading Economics global macro models and analysts expectations. Looking forward, we estimate it to trade at 20.73 in 12 months time.