Commerzbank Shared Its USD/TL Forecast

Commerzbank shared its USD/TL forecast. The institution raised its USD/TL forecast for the month of March 2022.

Commerzbank AG said that the Central Bank of the Republic of Turkey (CBRT) interest rate cut in September started an inflation-currency spiral, which it expects will eventually lead to the termination of interest rate cuts and further increases. In the report published by Tatha Ghose, the bank's senior emerging market economist based in London, it was shared that there may be sharp rises in the foreign currency until interest rate hikes resume. The bank increased its March 2022 USD/TL forecast to 11 from 10. In the report following statements were included: "The rate cuts that took place in an environment of high inflation caused the lira to weaken. While the weakening of the Turkish lira also fuels inflation, it also causes this spiral. Additional interest rate cuts are very likely to remain on the table because the cuts are not based on fundamental economic considerations. It would be naive to expect it to stop for reasons other than financial market pressures."