Recently, due to Turkey’s high political uncertainties and economic fluctuations, foreign financial institutions have updated their year-end predictions for USD/TRY. Following the detention of Ekrem İmamoğlu, the resulting unrest increased volatility in Turkish assets. However, despite recent market stabilization, foreign institutions are still forecasting the year-end level for USD/TRY. Here are the key predictions from major foreign institutions:
Morgan Stanley
Morgan Stanley has downgraded its stance on Turkey’s country debt and removed its “overweight” position due to an increase in risk premiums. However, due to the Central Bank’s proactive stance in maintaining external buffers and calming the markets, they predict USD/TRY will end the year at 41 TL. Additionally, they anticipate that the Central Bank may begin interest rate cuts in June. Morgan Stanley has revised its year-end inflation forecast to 29% and the policy interest rate to 33.5%.
ING
ING noted the significant risks for the Turkish lira due to sharp movements and its positioning in carry trade. They expect USD/TRY to reach 38.10 by mid-year and 40.20 by year-end, based on the Central Bank’s March 6 interest rate decision.
HSBC
HSBC highlighted that the lira’s outlook became even more uncertain following the detention of İmamoğlu and that USD/TRY could surpass previous predictions. They believe the risks still favor a higher USD/TRY level and have adjusted their year-end forecast to 41-43 TL. They also noted that even if the Central Bank continues its currency policy, risks are skewed towards a weaker lira.
JPMorgan
After İmamoğlu’s detention, JPMorgan raised its year-end inflation forecast from 27.2% to 29.5% and its interest rate forecast from 30% to 35%. They predict that the Central Bank will cut rates by 150 basis points at each meeting starting in April. JPMorgan also mentioned that foreign investments in Turkish assets (including USD/TRY and government bonds) total about $77.3 billion, and they expect the Central Bank to use its reserves to address the dollarization problem.
Societe Generale (SocGen)
The French bank Societe Generale decided to close its short position on USD/TRY. They cited increased risks related to the volatility of the Turkish lira and opted to exit their short positions.
Goldman Sachs
Goldman Sachs maintained its 12-month forecast for USD/TRY at 42 TL. The bank expects the Central Bank to prefer a smoother depreciation of the lira rather than continuing its rate-cutting cycle. Goldman Sachs also predicted that the Central Bank will raise its interest rates by 350 basis points. Additionally, they foresee limited effects on growth from the recent political developments.
SEB
SEB Research has set its year-end USD/TRY forecast at 45.00 TL after the Central Bank’s March 6 rate decision. According to their report, they expect USD/TRY to reach 39.00 at the end of Q2 and 43.00 by Q3. For Q1 of 2026, they forecast USD/TRY at 49.80.
Summary
Foreign institutions are predicting varying levels for USD/TRY by the end of the year, based on Turkey’s political and economic uncertainties, as well as the Central Bank’s interest rate policies. Most forecasts suggest that the Turkish lira will depreciate further, with USD/TRY expected to reach between 40 TL and 45 TL by year-end. The Central Bank’s interest rate decisions and inflation trends are expected to play a significant role in shaping these forecasts.
