The Lira plummeted 28.8% this year versus the USD and 23.7% against the EUR, extending the downward trend of 2020. Economists at Société Générale expect the USD/TRY to reach 22 by the end of 2023.

Higher rates could dampen growth and pummel TRY

“The Lira still faces headwinds from deeply negative real rates, a wide current account deficit and geopolitical risk.”

“We expect the TRY to gradually weaken towards 19.00/USD by 1H23 and 22.00/USD by end-2023 as the current policy mix persists.”

“General and presidential elections in June/July 2023 could mark a turning point for the currency if a new government is elected and resets monetary policy.”

“Higher rates could dampen growth and weigh on the Lira.”