Turkish Central Bank predicts year-end USD/TRY exchange at 30.05

The Turkish Central Bank (TCMB) has unveiled the results of its latest Market Participants Survey, offering valuable insights into Turkey's economic landscape and expectations.

Market participants foresee the year-end USD/TRY exchange rate at approximately 30.05, serving as a pivotal indicator of the country's economic stability. However, concerns arise as expectations for the USD/TRY exchange rate in the next 12 months have risen from 37.26 to 38.64, indicating potential turbulence in the foreign exchange market.

One notable trend is the increase in Turkey's current account deficit expectations. The previous estimate of 44.3 billion USD has escalated to 45.9 billion USD, highlighting concerns about the nation's trade balance. Projections for the year 2024 show a current account deficit of 35.4 billion USD, indicating the importance of addressing trade imbalances in the coming year.

The survey also delves into policy rate expectations. For the current month, market participants anticipate a policy rate of 33.68%, and these expectations slightly rise to 37.27% in three months. The 12-month policy rate projection stands at 37%, emphasizing the Turkish Central Bank's role in managing economic stability.

Inflation expectations have seen adjustments as well. The expectation for October's Consumer Price Index (CPI) increase has decreased from 4.42% to 4.30%, offering a more optimistic outlook for near-term inflationary pressures. However, the year-end inflation projection remains concerning at 68.01%, reflecting persisting challenges in managing inflation.

Looking ahead, market participants have raised their inflation expectations for 12 months and 24 months, underlining the ongoing challenges in maintaining price stability. Inflation expectations for 12 months ahead have increased from 44.94% to 45.28%, and for 24 months ahead, they've risen from 23.87% to 25.82%.