Ekonomické zprávy

Turkish lira hit its all-time low against the US dollar

The USD/TRY rose moderately today, and reached a new record high (18.9620). Investors' concerns about the impact of recent devastating earthquakes on the country's economic prospects continue to put pressure on the Turkish lira. In addition, there is increasing uncertainty about the results of the presidential and parliamentary elections to be held in mid-May. Since the beginning of 2023, the lira has fallen by 1.4% against the US dollar after collapsing by about 30% last year.

The lira has been largely stable since August thanks to authorities' heavy hand in the forex market, including a decline in reserves since the first quake hit in early February. While Turkey's net foreign exchange reserves rebounded from just over $6 billion last summer, when it was at its lowest in at least 20 years, they have lost some $8.5 billion since the earthquake. According to the latest data, the central bank's net international reserves fell some $1.4 billion to $20.2 billion in the week to Feb. 24.

Wells Fargo experts predict that the USD/TRY is likely to consolidate near the level of 19 before the end of the elections in the country, mainly due to currency interventions. However, experts have warned about the likelihood of a further fall of the lira in the long term if the election is won by the incumbent president Tayyip Erdogan, who is known for his unorthodox politics. Meanwhile, if the opposition wins and the transition to a more traditional policy, the USD/TRY pair may fall by about 20% by the end of the second quarter, Wells Fargo said.

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