Exchange Rate and Inflation Forecasts for Turkey

Exchange rate and inflation forecasts for Turkey was made by two foreign institutions. One of the institutions increased their USD/TL estimation to 20.

UK-based Standard Chartered Bank, while updating its USD/TL forecast for 2022 and 2023, stated that currency-protected Turkish lira deposits pose a risk to public finances. According to Bloomberg HT, Standard Chartered Bank, in a research report it published, said that heterodox monetary policy combined with 36 percent high inflation created a structural break for the Turkish lira and they increased their 2022 year-end USD/TL forecast from 12 to 20. While Standard Chartered has increased its USD/TL forecast for the end of 2022 from 12 to 20, it expects the US dollar rate to reach 28 by the end of 2023.

Inflation Forecast from Bank Of America

Bank of America, in a research report it published, shared its estimation that the inflation in Turkey will be 52.6 percent on average in 2022 and that it will reach 40 percent at the end of the year. Stating that there may be fiscal measures and VAT reductions that will reduce input prices in order to reduce inflation, BofA underlined that such measures will have a limited effect on prices that depend on the exchange rate and will create a financial burden.