The Turkish lira (TRY) is currently trading at 90-day lows against the US dollar (USD), with the exchange rate approximately at 0.024192. This represents a decline of 2.1% from its three-month average of 0.024717, which suggests relatively stable trading conditions within a 5.0% range.
Recent developments surrounding the Turkish economy, particularly regarding inflation, have led analysts to adjust their expectations for future interest rate movements. The Turkish government has forecasted inflation to reach 28.5% in 2025, with the ambition to attain single-digit inflation by 2027. This high inflation persists despite expectations for smaller interest rate cuts from Turkey's central bank, as noted by major financial institutions such as JPMorgan and Goldman Sachs. These adjustments reflect concerns about unexpectedly high inflation data, which may impact the lira further.
In Turkey, the impending termination of the FX-protected deposit scheme is adding to the economic uncertainty, having cost the government an estimated $60 billion. Additionally, the recent political unrest, highlighted by the arrest of opposition leader Ekrem İmamoğlu, has triggered protests that could diminish investor confidence in the TRY.
On the other hand, the USD remains somewhat stable despite rising inflation in the U.S., which reached a seven-month high in August. Investors appear to be factoring in potential interest rate cuts by the Federal Reserve through the end of 2025. However, notable shifts in fiscal policy leadership may affect the dollar's future trajectory. The upcoming publication of the U.S. consumer sentiment index may bolster or weaken the dollar depending on the results, adding an element of uncertainty.
In summary, the TRY is facing headwinds from high inflation, political instability, and adjustments in monetary policy expectations. Meanwhile, the USD's performance is being influenced by inflationary pressures and shifting interest rate outlooks from the Federal Reserve. As analysts continue to monitor these developments, fluctuations in the TRY to USD exchange rate are expected, emphasizing the importance of capitalizing on favorable market conditions for international transactions.
