Dollar hits historic high after reaching 30 Turkish liras

Duvar English

The dollar rose to 30.0098 Turkish liras and reached its historical peak as of 10.30 (local time), Jan. 11. Economists had considered 30 liras as the “psychological threshold.”

While euro prices carried its historical peak to 33.1077 Turkish liras, euro/dollar parity is moving at 1.0984 levels. The British pound is traded at 38.4726 liras.

Following the latest developments, US investment bank JPMorgan revised its 2024 year-end forecast for dolar/lira from 34 to 36.

According to the reporting of the online news oultet Bloomberg HT, strategists including Saad Sıddiqui and Fatih Akçelik stated in their report that there is potential for real appreciation for the lira, but this depends on the continuation of the disinflation process

According to the report, the government’s policy goals and practices so far have been encouraging. They noted that investors would need continued evidence that inflation was on a sustained downward path for these initial gains to consolidate and solidify.

"The recent trend of lira depreciation suggests a trade-off between reserve accumulation and nominal exchange rate performance. In the short term, this trend hinders inflows into the local currency and poses a challenge for the disinflation process," the report said.

"However, as long as this depreciation for investors is below what is priced in futures, which we think will be the case in the coming months, Turkish lira still offers reasonable total returns,” the strategies added.

Central Bank Governor Hafize Gaye Erkan will attend an investors meeting in New York.

At the meeting, Erkan is expected to meet with more than 200 senior representatives from the world's largest investment funds.

Blackrock, Vanguard, Fidelity, UBS, Morgan Stanley, JPMorgan, Goldman Sachs, and PIMCO stand out among the institutions that will attend the meeting.

Turkey's risk premium is trading above 300 basis points, while the benchmark bond interest rate is above 40 percent.