The recent outlook for the EUR/TRY exchange rate indicates significant volatility influenced by both local and international economic factors. As of late October 2023, the EUR to TRY rate is observed at 90-day highs near 49.18, marking a 1.4% increase over its 3-month average of 48.49. The currency has traded within a stable range of 3.5% from 47.51 to 49.18.
Analysts have noted that the euro has recently benefited from its negative correlation with the US dollar, although gains were tempered by disappointing Eurozone industrial production figures. The European Central Bank (ECB) is shifting towards a more dovish monetary policy amidst slowing economic growth, with market expectations indicating a potential cut in rates to 3.5% by late 2025. This policy shift could further reduce the interest rate differential with the U.S., impacting the euro's performance.
The euro's strength has also been buoyed by recent geopolitical events, including Bulgaria's upcoming accession to the eurozone, expected to enhance the euro's circulation and influence its value. Despite a notable 14% appreciation against the USD over the past months, the current geopolitical tensions and macroeconomic challenges present a mixed picture for the euro's future performance.
In Turkey, the economic situation poses additional volatility for the Turkish lira. The central bank has reevaluated its inflation targets, raising its outlook following a surprising surge in the annual inflation rate to 33.29% in September 2025. This rise has pressured the central bank to adopt a cautious approach, cutting interest rates to 39.5% only recently while signaling readiness to tighten policy if inflation deviates from targets. The ongoing political unrest and associated market volatility add further risk to the lira’s stability.
Oil prices also play an essential role in this dynamic, currently trading at $63.01, which is 4.1% below the 3-month average and has exhibited a volatile range from $60.96 to $70.13. Given that Turkey is heavily reliant on energy imports, fluctuations in oil prices will likely affect economic conditions and the lira's performance.
Overall, market experts suggest that the interplay between ECB policy, geopolitical factors, and inflationary pressures in Turkey will continue to influence the EUR/TRY exchange rate in the coming months. Investors should remain alert to how these elements evolve, as they could present opportunities for strategic international transactions.
