Lira Weakens Further as Energy Costs Bite, MUFG Predicts USD/TRY 57.00

Analysts at MUFG are forecasting a significant decline in the value of the Turkish Lira against the US Dollar, predicting a rate of 57.00 by September 2027.

The forecast is based on concerns over energy costs and weaker reserves weighing on the Lira, as well as Turkey's high interest rates failing to stem its weakening trend.

According to MUFG, the current account deficit in Turkey will continue to widen due to higher import costs and weaker tourism receipts, increasing the economy's external financing needs.

The bank notes that Turkey's central bank has held its policy rate at 37% as energy costs threaten inflation, but argues that the authorities' capacity to resist currency weakness has diminished.