Economy in Turkey: “Interest rate and USD/TRY forecast” from Bank of America
Bank of America has released its forecasts for the Turkish economy. According to their predictions, the USD/TRY exchange rate will reach 30 by the end of the year, and the policy interest rate will reach 45 percent next year. Here are the bank’s latest forecasts for the Turkish economy
In a report where Bank of America shared its forecasts for emerging economies, they also included predictions for the Turkish economy. The bank predicts that the USD/TRY exchange rate will reach the level of 30 by the end of the fourth quarter of 2023.
According to the bank, the volatility in currency markets caused by the increase in oil prices could negatively impact the performance of the currencies of countries in Eastern Europe, the Middle East, and Africa, which are net oil importers.
USD/TRY FORECAST
Bank of America expects a steady depreciation of the Turkish Lira and has set its USD/TRY forecast at 30 for the fourth quarter of 2023. The bank’s forecast for the USD/TRY exchange rate is 32 for the first quarter of 2024, 35 for the second quarter and 37 for the third quarter.
Bank of America’s peak forecast for the Central Bank of Turkey’s policy interest rate (TCMB) is 45 percent. The report also states that “TCMB will likely raise interest rates more than priced in.”
The report lists the economic risks and notes that rising oil prices increase the risks related to the current account deficit and that the pressure on TCMB to raise interest rates will also rise.
