To be clear, we still forecast a weaker Turkish currency over the course of our forecast horizon; however, we have scaled back the magnitude of that depreciation to reflect improving and more orthodox trends in policy.

After 21.50 percentage points of tightening, we are more confident that the direction of policy will be sustained and that sentiment toward Türkiye can improve, and foreign investor capital can follow in the near future.

We also believe credit rating agencies such as Moody's, S&P and Fitch may be close to upgrading Türkiye's sovereign credit rating, or at a minimum, revising outlooks to ‘positive,’ given the latest developments.

The story surrounding Türkiye is not quite outright positive just yet, and local political and geopolitical risks remain, but should the latest trends continue and credit rating revisions materialize, we could revise TRY forecasts as well.

USD/TRY – Q4-2023 28.50 Q1-2024 29.00 Q2-2024 29.00 Q3-2024 29.50 Q4-2024 30.00 Q1-2025 30.50