Tensions between Russia and Turkey can place a great burden on the Turkish lira. Experts believe that early next year, the Turkish national currency will slump to a record low.
When the party of President Erdogan won the elections in Turkey, the situation in the currency market was completely clear. At the beginning of November, before the incident with the Russian warplane, the Turkish lira grew by 8 per cent against the US dollar that is the fastest pace among 31 main currencies. After the downing of the Su-24, the Turkish lira dropped 3.4 per cent just over a week.
Today, the Turkish lira is the second worst currency in the world following the Brazilian real. The sanctions imposed by Russia are pushing the lira further down together with anticipation of the interest rates lift-off by the US Federal Reserve.
Currency strategists expect that USD/TRY will plunge to a record low in the first quarter of 2016. According to Roxana Hulea, a strategist at Societe Generale, the Turkish lira will sink to the level of 3.1 per dollar over the first three months of 2016.
Russia’s ban on tourist travel to Turkey will cause a serious damage to the Turkish tourism industry as Russians make up about 10% of the tourists in the country.
Experts say that Turkey’s GDP will inevitably fall considering the economic growth which has been the slowest since 2012.
