Deutsche Bank Shared Its Evaluation Regarding Turkey

Deutsche Bank shared its evaluation regarding Turkey. The bank said it expects a further 100 basis points cut this year.

Deutsche Bank Middle East and Eastern Europe Research Manager Christian Wietoska, who was a guest of the Market Line program on Bloomberg HT, stated that the USD/TL rate estimates for the end of the year are around 9.75-9.80 and they expect another 100 basis point interest rate cut this year. Wietoska stated that they expect the European Central Bank to remain relatively dovish and that they think the FED may start to reduce its asset purchases in November. Expressing that the tightening cycle has begun in emerging markets, Wietoska emphasized that valuations in emerging market currencies are currently cheap and the performance of currencies is not good. Wietoska warned that countries like Turkey may have difficulties if energy prices increase further. Wietoska stated that inflation may continue to remain high when the depreciation in the exchange rate is combined with rising energy prices, he said, "There are risks regarding Turkey, but on the positive side, we see that Turkey's gross reserves are higher than last year." Wietoska stated that Turkey can benefit from this when looking at the global problems in the supply chain and said, "The reversal of globalization may cause the production to shift to Europe. I wouldn't have said such a thing 5 years ago, but now that there are such supply problems, Turkey may see more foreign direct investment." Stating that the USD/TL will be around 9.75-9.80 at the end of the year, Wietoska noted that they expect another 100 basis point reduction until the end of the year and that they predict inflation to be 19.5 percent at the end of the year.