On the contrary to most expectations at the beginning of 2017, the Turkish lira has been doing real well against the US dollar as it has managed to compensate for some of its losses and gained about 8 percent in value in the last six months. It goes without saying, this has been mainly due to the solid support extended by the Central Bank of Turkey, not to forget the positive contribution caused by geopolitical risks affecting the dollar and decisions made by FED this year.
When we look back to see what course the Turkish lira has followed recently, we see that it started with its upward trend against the dollar in February this year.
Before that the US dollar had gained considerable value against the TL starting September last year and reached 3.9422 at the beginning of this year. It was after the intervention of the Central Bank of the Republic of Turkey (CBRT) in February though, that the TL started recovering and the political unrest which prevailed after Trump took office certainly enhanced the weakening of US dollar against TL enabling the TL to gain 7.96 percent in the last six-and-a-half month period. Today, when we look at the figures we see a rate of approximately 3.50 and experts predict this uptrend of the TL may continue.
Analysts who closely follow the movements of TL comment that the announcement made by Mehmet ŞİMŞEK (Deputy Prime Minister) that there are no prospects of an early election on the agenda of Turkey at the moment, may be a good reason to support the upward trend of the TL.
On top of that effective policies introduced and monitored by the administration and CBRT such as carry-trade and successful Treasury auctions have helped to increase the value of TL so far and Turkey’s efforts to show itself as an attractive investment target until 2019, focusing on economic reforms away from elections seem to be paying off.
To recap, experts comment the TL is being positively affected by CBRT policies and that the strong growth of Turkey is positive for the currency. Moreover they believe that expectations about the acceleration of economic reforms in the coming periods may be a positive signal for foreign investors. They also foresee that the Fed will not raise interest rates this year due to low inflation meaning the TL could appreciate against the dollar at the end of the year, possibly reaching 3.40.
