The USD to TRY exchange rate has recently seen significant movements and is currently at 90-day highs near 42.70, representing a 1.6% increase above the 3-month average of 42.01. This slight upward trend comes despite the US dollar's overall weakening, driven by dovish expectations from the Federal Reserve regarding interest rate cuts. Analysts note that the Fed could initiate multiple rate cuts starting as early as March 2026, supported by a rise in jobless claims and mixed economic data pointing towards slowing growth.
Meanwhile, the Turkish lira is influenced by domestic economic factors, including a recent cut in the policy interest rate by the Central Bank of the Republic of Turkey (CBRT) and challenging inflation forecasts. In October, the CBRT reduced its interest rate to 39.5%, indicating a cautious approach to easing amid high inflation risks. Furthermore, while the central bank maintains an inflation target of 16% for the end of 2026, recent indicators suggest actual inflation may exceed these targets, complicating Turkey's economic outlook.
Significant events, such as political turmoil and economic growth projections that fall short of government expectations, also contribute to the volatility of the lira. The economic growth forecast for Turkey has been revised downwards, with predictions for GDP growth below government targets. Consequently, these combined factors could limit the lira's ability to strengthen against the USD, particularly in light of a relatively stable USD price range maintained over the last few months.
With markets reacting sensitively to upcoming economic data, including inflation figures and insights from the Fed, traders will be watching for signals that could further alter the exchange rate dynamics between USD and TRY. It remains crucial for businesses and individuals engaged in international transactions to monitor these developments closely as they navigate currency conversions.
