Is S&P manipulating the dollar-TL exchange rate while raising Turkey’s credit rating?

International credit rating agency Standard & Poor’s Global had upgraded Turkey’s credit rating by one notch in line with expectations. According to the statement from S&P Global, Turkey’s credit rating was raised from “B” to “B+” with a “positive” outlook.

Additionally, S&P anticipated that following local elections and considering the impact of external rebalancing, there would be an improvement in coordination between monetary, fiscal, and revenue policies in Turkey.

S&P suggested that it was likely for the Central Bank of the Republic of Turkey (CBRT) to maintain its benchmark one-week repo interest rate at 50% for the remainder of 2024 to mitigate pressures on the Turkish lira and minimize its impact on inflation.

S&P Global provided growth expectations of 3.0% for both this year and the next. The agency also forecasted consumer price inflation at 55.8% for this year and 27.3% for the following year.

One of the interesting forecasts made by S&P Global was regarding the USD/TRY exchange rate at the year-end. According to their forecast, the USD is expected to be at 31.88 TL by the end of this year and at 43.00 TL by the end of next year. However, it’s worth noting that other experts or institutions have different forecasts, with many suggesting that the dollar could be around 40 TL by the year-end.