The Turkish lira is in dire straits: policy of the Turkish president made the currency highly unstable. Last year, the Turkish lira was among the top three worst currencies in the world, and this year, it became the worst one. Some market participants think that it is only the beginning and the lira can fall even further. But, reputable experts believe that it is early to give up on the lire.
According to a recent survey, economists expect the lira to strengthen. As early as in the middle of 2017, the Turkish lira might regain the lost ground. Since the beginning of 2017, the lira has declined by 7 percent against the US dollar, but experts believe that this fall is temporary. Economists forecast that the lira can stabilize at 3.61 against the greenback. The Central Bank of Turkey planned a series of measures to support the national currency, in particular, liquidity adjustment and a possible raise of interest rates. Moreover, majority of economists expect an imminent interest rate hike despite the President of Turkey’s objections to this issue. The Central Bank will probably raise rates by 50 basis points, although it is possible that the increase will be much more aggressive.
According to independent observers, the most important condition for the lira’s stabilization is a genuine independence of the Central Bank of Turkey. But, due to Erdogan’s authoritarian regime, the market believes that the Central Bank operates under unrelenting pressure from the government.
