Commerzbank report says new currency crisis in Turkey is at the door
A report named “the next lira Crisis”, published by Commerzbank, has projected that 1 US dollar is expected to be equivalent to $ 10.00 in the 3rd quarter. The article emphasized that the element that will trigger the upcoming crisis is the same as the currency crisis in 2018, citing the interest rate policy imposed by President Erdogan on the Central Bank.
According to the report prepared by a senior economist at Commerzbank, Germany’s second-largest bank, “as the new head of the central bank appointed by Erdogan makes conventional statements, markets are aware that there will be an unpredictable policy experiment. This particular experiment is observed to possess a risk of leading to currency inflation.”
According to the report, Commerzbank predicts US dollar will be equal to 10 TL in 3rd quarter, after the central bank begins its rate cut cycle in the summer.
INFLATION EXPECTATIONS FOR 2021-22
Commerzbank forecasts that inflation will accelerate strongly by the end of the year, based on the assumption that interest will be drawn to around 13 per cent in a few steps. The report predicts inflation rates as follows:
“We forecast inflation of 20.9 percent for the end of 2021 and 21.5 percent by the end of 2022. At the end of the experiment, we would like to note that the dollar-TL can be fixed at 10.00, as the indicator interest rate will rise again to 20 percent.
Some kind of regime change or institutional transfer may be necessary for the lira to regain stability (for example, under the supervision of the IMF).”
