TurkeyCapital Economics predicts 6.25 for the US dollar/TL

2021-02-18 11:02

Capital Economics announces US dollar/TL prediction

Capital Economics have released an assessment on the impact of policy changes in Turkey’s economy written by Jason Tuvey, the Emerging Markets Senior Economist.

In the article, it was pointed out that the change in the policy of Central Bank of Turkey (TCMB) was supported by the recovery in domestic financial markets and for further progress this improvement was necessary. It was also stated in the report that the Turkish lira has appreciated by over 20 percent against the dollar and is the best performing developing country currency since the beginning of 2021.

Best performing emerging market currency

According to the assessment made by Capital Economics, it was reported that the dollar/TL is expected to realize at the level of 6.25 by the end of this year. Reminding that the TCMB has gone to simplification by tightening monetary conditions, it was also emphasized that the bank made an effort to improve communication and the fight against inflation was taken more seriously. The assessment pointed out that investors seem confident that the transition to orthodox policy will be permanent, and the Turkish lira appreciated by over 20 percent against the dollar after reaching its lowest point in November last year, and the developing country currency that has performed the best since the beginning of 2021.

Views on Turkey’s economy improved faster than anticipated

The assessment drew attention to the appreciation of the Turkish lira supported with the declining risk premium, and it was emphasized that the TL recovered faster than predicted earlier according to overall investors’ views towards Turkey. In the article, it is indicated that Turkey’s risk premium will continue to fall until encouraging steps towards alleviating the government of geopolitical tensions to keep continue.

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