IIF lifts fair value of TRY against US Dollar over widening current account deficit

The Institute of International Finance (IIF) lifted the fair value of Turkish Lira against US Dollar to TRY 21.00, IIF Chief Economist Robin Brooks announced.

We're publishing updated FX fair values this week. As part of that exercise, we lift our Turkish Lira fair value from $/TRY 16.50 to 21.00 given the sharp widening in the current account deficit. Our fair value was $/TRY 5.50 in 2020 before the COVID pandemic. With @UgrasUlkuIIF pic.twitter.com/N3wBMlEYMt

— Robin Brooks (@RobinBrooksIIF) September 25, 2022

Brooks said on Twitter:

"We're publishing updated FX fair values this week. As part of that exercise, we lift our Turkish Lira fair value from $/TRY 16.50 to 21.00 given the sharp widening in the current account deficit. Our fair value was $/TRY 5.50 in 2020 before the COVID pandemic."

Turkey's current account deficit widened to $4,010 million in July 2022, increasing by $3,700 million compared to the same month of the previous year, hence bringing the 12-month cumulative deficit to USD 36,585 million.

The fair value of Turkish Lira according to IIF, was TRY 5.50 in 2018 when the transition to the new presidential system took place in Turkey.

Turkish Lira's fair value in US Dollar terms has diminished to approximately one fourth of the value it had four years ago.

The current price of one USD in the market was TRY 18.44 as of Monday.

IIF is the association for the global financial services industry. Created in 1983, it represent more than 450 firms from over 70 countries. IIF members include commercial and investment banks, asset managers, insurance companies, sovereign wealth funds, hedge funds, central banks and development banks.