Turkish lira expected to fall 12% against dollar in next six months - poll

Emerging market currencies will outperform the U.S. dollar over the next six months, but the Turkish lira is expected to fall by at least 12%, a Reuters poll of foreign exchange analysts found.

After a strong start to the year for emerging currency markets, the U.S. dollar has risen nearly 4% from its recent lows, driven by support from interest rate differentials. However, as long as U.S. inflation continues to drift lower, emerging market currencies will outperform the majors, Reuters said.

But Mexico's peso and the Turkish lira, are the only two emerging market currencies covered by the poll expected to weaken.

The Russian ruble is expected to rise 2.0% to $74.1 in six months, while the Canadian, Australian, and New Zealand dollars are forecast to rise 3.2%, 5.4%, and 3.0%, respectively.

The South African rand, a high-yielding currency that has lost more than 6% so far this year, is expected to rise about 3% to $17.67 per dollar over the next six months.

The lira, the worst-performing emerging market currency in the past year, is expected to fall about 12% to $21.68 in the next six months.

Reuters also quoted Brendan McKenna, international economist at Wells Fargo, as saying that the government's unorthodox policies were the reason:

"A lack of an independent central bank and an unorthodox view on monetary policy should keep the lira on a weakening trend against the greenback for the foreseeable future, unless the presidential election this May results in regime change," she said.