HSBC Revised Its USD/TL Forecast

HSBC revised its USD/TL forecast. HSBC raised its forecast on USD/TL exchange rate.

Following the rate cut of the Central Bank of the Republic of Turkey (CBRT), which exceeded expectations, foreign institutions are updating their USD/TL expectations upwards. HSBC, one of these institutions, increased its year-end USD/TL forecast from 8.65 to 9.80, and its year-end forecast for 2022 from 8.80 to 10.70. In the report published by CEEMEA FX Strategist Murat Toprak, three factors that may play a role in the additional weakness in the lira are listed as follows: suppression of real interest rates in the shadow of high inflation expectations, high dollarization risk, and interruption of the improvement in the current account balance.

Unicredit Revised Its Forecast

Unicredit said that they expect interest rates to decrease to 14 percent by the end of 2021, while updating their year-end USD/TL forecast from 9.3 to 10.5 after the Central Bank of the Republic of Turkey reduced the policy rate to 16 percent. Unicredit, which also increased its inflation forecast for the end of 2021 from 18.5 percent to 19.6 percent, stated that they predicted that annual inflation will be around 20 percent in the first half of 2022, and then regress to 16.3 percent.