Recent TRY stability to be followed by further weakness – MUFG

The Turkish Lira has continued to display remarkable stability against the US Dollar in November. Nonetheless, risks remain heavily tilted to the downside for the TRY, in the view of economists at MUFG Bank.

Intervention is helping to support TRY

“According to Bloomberg, Turkey has stepped up interventions to support the Lira over the last couple of months which had raised total intervention close to USD100 billion through to October. The recent pick-up in intervention has coincided with further rate cuts from the CBRT who have continued to lower rates despite elevated inflation.”

“Looser monetary policy and credit growth is being deployed to support growth ahead of next year’s elections. Turkey is also acting to secure additional financing from Saudi Arabia and Qatar to support the Lira.”

“We continue to expect recent TRY stability to be followed by further weakness.”