Commerzbank’s Tatha Ghose notes that the Turkish Lira is rapidly approaching the bank’s 44.0 USD/TRY quarter‑end target as inflation expectations rise and external balances deteriorate. Higher medium‑term inflation forecasts, a widening core current account deficit and reserve drawdowns underscore market doubts about Turkey’s macro rebalancing and point to continued Lira depreciation.

Rising inflation expectations and balance of payments concerns

"The Turkish lira has been under steady pressure in recent months and appears to be already racing towards our quarter-end target of 44.0 (versus the US dollar)."

"CBT’s monthly survey highlights market expectations for end-2026 inflation rising further by c.1pp from 23.2% to 24.1%."

"We would interpret a 24% end-2026 forecast combined with 17% end-2027 forecast to represent virtually no improvement from current status."

"The balance of payments data for December was not encouraging either, with the seasonally-adjusted current-account deficit re-widening and capital inflow drying up."

"These developments are consistent with the lira exchange rate breaching successive levels and continuing on its steady depreciation path."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)