TRY: Commerzbank Retain 35.0 Year-End USD/TRY Forecast

Commerzbank retain their ‘symbolic forecast’ of 35.0 for USD/TRY by the end of 2024. They note that TRY has stabilised for now after the CBRT re-started rate hikes in March. At the same time, inflation data surprised to the downside for the first time in many quarters during June, and CBRT’s FX reserves began to rebound. Recent dovish surprises from US data have also resulted in a more EM-supportive market environment, which further benefits the TRY.

• For now, Erdogan and Simsek have managed to re-assure the markets that they remain committed to conventional economic policies, Commerzabank say. CBRT management are also promising that inflation will genuinely moderate in the months ahead. They add that inflation will decelerate superficially because of base-effects, but if it were not to decelerate on an underlying level, then Turkish policymakers will face another crisis of confidence soon.