Lira Plunges as Commerzbank Forecasts Further Depreciation Against US Dollar
Commerzbank analysts predict that Turkey's currency, the Turkish lira, will continue to depreciate against the US dollar. The bank's strategists point to high inflation and monetary policy challenges as key drivers of this trend.
The Turkish lira has been under pressure due to its high inflation rate, which exceeds 60% annually. Despite multiple interest rate hikes, real yields remain negative, discouraging foreign investment. Political pressure on the central bank to maintain loose policy has also undermined credibility, leading investors to demand a higher risk premium for holding lira assets.
Commerzbank's note highlights that the central bank's limited room for aggressive tightening due to political constraints and the need to support economic growth is exacerbating the pressure. Additionally, external vulnerabilities such as a large current account deficit and low foreign exchange reserves contribute to the lira's decline.