Economy in Turkey: Public Sector Defends Turkish Lira Amid Dollar Surge with year-end forecast of 35 TL
The Turkish lira faced pressure this week as foreign investors, seeking to realize “carry trade” profits, drove a significant outflow of $3.5-4 billion, with $3 billion attributed to foreign exits. The public sector intervened by selling foreign currency, causing Central Bank reserves to decline and the dollar/TL rate to rise above 1%. The defense line is reportedly set at 34.60 lira, with expectations of further but manageable outflows until year-end.
Since returning to traditional monetary policies after the 2023 elections, Turkey has emphasized a real-valued TL as a key anti-inflation measure, attracting both domestic and foreign investors. Following a strong “carry trade” inflow of $15-20 billion this year, Turkey has become a top destination for such investments globally.
Banking experts predict additional outflows of $1-2 billion by mid-December, pushing the dollar/TL rate closer to a year-end forecast of 35 lira. No policy rate changes are expected in the upcoming Monetary Policy Committee meeting, with potential rate cuts delayed until January 2025, supporting the lira further. Despite recent volatility, analysts see no major risks ahead.
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