Recent forecasts for the USD to TRY exchange rate signal potential volatility driven primarily by divergent central bank policies and market sentiment. As of early December 2025, the USD has been under pressure, largely due to declining US inflation figures and growing expectations for rapid Federal Reserve rate cuts in 2026. A recent release of the consumer price index indicated that US inflation dropped from 3% to 2.7% in November, prompting a reevaluation of the Federal Reserve's tightening stance. Analysts observe that this dovish outlook could diminish the USD's yield advantage, placing downward pressure on the currency.
In the Turkish market, the Central Bank of the Republic of Turkey (CBRT) announced a reduction in its policy interest rate by 100 basis points to 39.5% in late October. This decision reflects a cautious approach to monetary easing amidst rising inflation risks. While the CBRT has targeted an inflation rate of 16% by the end of 2026, recent economic forecasts suggest that actual inflation may exceed this target. Additionally, economic growth projections have been downgraded, indicating potential pressures on the lira.
Currently, USD to TRY is trading at 42.75, notably 1.5% above its three-month average of 42.11. This rate has remained within a fairly stable range of 41.37 to 42.80 over the past few months, suggesting limited immediate volatility. However, the broader economic context indicates that a more pronounced movement could occur depending on upcoming economic data releases and geopolitical developments.
Markets are particularly attentive to upcoming US consumer sentiment indicators and inflation data that could further influence the Fed's rate outlook. Any updated signals from the Fed regarding the pace and timing of rate cuts could significantly affect the USD's trajectory against the TRY. If US data supports the current dovish sentiment, it may extend the dollar's decline, whereas stronger economic indicators could provide a temporary reprieve.
Simultaneously, the Turkish lira's performance may be affected by ongoing domestic issues, including political events and changes in economic growth dynamics. It is critical for traders to remain vigilant amid these diverging trends in monetary policy and economic performance as the year progresses.
