The Lira continued to remain stable in February. Elections remain pivotal for TRY and policy outlook in Turkey, economists at MUFG Bank report.

Additional stimulus measures will add to concerns over the inflation outlook

“President Erdogan has announced fresh fiscal stimulus measures to support rebuilding efforts and the CBRT has resumed their rate cutting cycle by delivering another 0.50 point cut in February. While the developments will help to dampen the hit to growth in Turkey this year, the additional stimulus measures will add to concerns over the inflation outlook.”

“The parliamentary and presidential elections in May are still expected to prove pivotal for the outlook for policy and Lira in the year ahead. Unless there is a shift away from unorthodox policy settings after the elections, we expect the TRY weakening trend to resume.” 

“USD/TRY – Q1 2023 19.000 Q2 2023 20.250 Q3 2023 21.750 Q4 2023 23.000”