So far this year to 14 June, the lira is already down 23%, after ending 2021 down by 44% against the US dollar. Economists at Commerzbank do not rule out the USD/TRY pair surging above their 18 forecast by end-2022.

Significant USD/TRY overshooting to attract sudden announcements and ad hoc intervention

“As Turkey’s inflation-FX spiral further unfolds, we warn about significant USD/TRY overshooting, which will likely attract sudden announcements and ad hoc intervention by policymakers. In this phase, USD/TRY could overshoot to well beyond 18.00.”

“Whether the response will be meaningful, or a continuation of nonsensical ideas about ‘liraization’ – only time will tell – but, our forecast of 18.00 USD/TRY by year-end does not represent a belief that the exchange rate cannot rise above this level.”

See: USD/TRY to race higher towards the 19 level – TDS