Barclays Sees Turkish Lira at 50.25 USD/TRY by 2026

Key Forecast Highlights

Barclays anticipates that Turkish monetary authorities will continue the current pace of lira depreciation as a primary tool for stabilizing inflation. The bank has set a year-end 2026 target for the USD/TRY exchange rate at 50.25, according to a recent research note.

Market Situation Overview

The Turkish lira has been under significant pressure due to a global VaR shock and surging oil prices, which have led to substantial portfolio investment outflows. In response, the Central Bank of Turkey has utilized its foreign exchange reserves to cushion the impact. It also limited local demand for dollars by increasing TRY OMO funding rates by 300 basis points to manage currency stability.

Economic and Policy Impact

Barclays assesses that the Central Bank of Turkey possesses sufficient hard currency reserves to sustain its foreign exchange stabilization policy, even with current high oil prices. This reinforces the view that the managed depreciation of the lira remains a crucial component of the country's monetary strategy.

Outlook Summary

The core outlook is that Turkish authorities will maintain the lira's depreciation path to address inflation. Investors will be watching the central bank's reserve levels and its response to ongoing global economic pressures and oil price volatility.

FAQ

Q: What is Barclays' USD/TRY forecast?
A: Barclays forecasts the USD/TRY exchange rate will reach 50.25 by the end of 2026.

Q: How is Turkey's Central Bank managing the lira?
A: The bank is using its foreign exchange reserves and has increased key interest rates to cushion the lira from outflows caused by global shocks and rising oil prices.

Source: Investing.com