USD/TRY could test 3.15 in a year’s view – Danske Bank

Senior Strategist at Danske Bank Vladimir Miklashevsky expects the Turkish currency to depreciate towards the 3.15 area vs. the dollar.

Key Quotes

“Inflation accelerated to 8.8% y/y in July, up from 7.6% y/y a month earlier, as the TRY fell 6.8% against the USD immediately following the coup attempt. The Turkish central bank kept its policy rate unchanged at 7.50% in July, continuing to trim the overnight lending rate by 25bp”.

“We expect the central bank to keep its key rate unchanged in the near future to stabilise the TRY and push consumer prices down to pre-coup attempt levels”.

“Given the prevailing political uncertainty while geopolitical tension has eased and economic ties with Russia are being restored, we cut our USD/TRY short- and medium term post-coup attempt forecasts from July to 2.98 in 1M (previously 3.12), 3.05 in 3M (previously 3.20), 3.07 in 6M (previously 3.25) and 3.15 in 12M (previously 3.35)”.