Statement from Germany’s Major Bank about position of Turkish Lira

Two weeks ago, Deutsche Bank, a major bank in Germany, took profits on its long Turkish lira carry trade position. However, after the Turkish Central Bank’s (TCMB) 500 basis point interest rate hike, they expressed confidence in re-entering a long Turkish lira position.

The unexpected interest rate hike by the TCMB, contrary to market expectations, has also led to positive foreign reports regarding the Turkish lira.

According to a report dated March 21 prepared by experts from Deutsche Bank, it was noted that confidence in taking long positions in the Turkish lira had been restored.

The report mentioned that the bank had closed long-term Turkish lira carry trade positions ten days ago due to pressure on TCMB reserves, upcoming elections, and unexpected upward surprises in inflation. However, after the TCMB’s 500 basis point interest rate hike, they increasingly feel confident about re-entering long positions.

The bank predicts that the recent interest rate hike will ease pressure on reserves and emphasized that Turkey’s inflation targeting goals are becoming more realistic.