The Turkish lira could reach 21 per dollar by June next year, when the country is scheduled to hold presidential and parliamentary elections, British bank HSBC said.
HSBC revised its estimate for the end of June 2022 from 18.2 pounds to the dollar, BloombergHT reported, citing the bank’s report.
The pound traded down 0.4% at 17.96 per dollar on Wednesday, meaning HSBC expects it to weaken by almost 15% by June next year. The currency has lost more than a quarter of its value in 2022 after a 44% drop last year.
HSBC also revised its year-end forecast for the pound to 19.5 per dollar from 17.5. The pound depreciated following an ever widening current account deficit. The rise in inflation to 79.6% led to more negative real interest rates and dampened initial enthusiasm for the government’s so-called strategy, which included the introduction of dollar-pegged bank deposits in pounds in December, said Murat Toprak, a currency analyst of HSBC for Central and Eastern Europe, the Middle East and Africa.
The main macroeconomic risk for the Turkish lira is related to the dynamics of the balance of payments, which is deteriorating more than expected, he said. According to him, the foreign trade deficit, which is approaching record levels, is leading to a wider current account deficit even at a time when the tourism sector should be stronger.
Toprak noted that the pound will depreciate more significantly in the fall, when seasonal tourism revenues will be less favorable and exports will continue to weaken due to recessionary pressures in Europe.
Petros Kranias
Source: Capital
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