The fallout from Russia’s war on Ukraine exerted a sharp hit on the lira, as USD/TRY climbed above the 14.00 handle. Economists at Société Générale expect the pair to surge towards the 19.00 zone by end-2022 on a prolonged conflict in Ukraine.

USD/TRY to skyrocket towards 20.00 in Q2 if geopolitical tensions escalate

“In a scenario of a prolonged conflict in Ukraine, the lira would likely see a weakening towards USD/TRY 16.00 in 2Q22 and 19.00 in 4Q22, probably without tightening by the CBRT.” 

“If geopolitical tensions escalate, the TRY could see a sharp sell-off towards USD/TRY 20.00 in 2Q22 – and only in this scenario would we expect the CBRT to deliver emergency rate hike.”