The recent forecasts for the USD to TRY exchange rate reflect significant influences from both the US and Turkish economies. Analysts have observed a downward trend in the US dollar, impacted primarily by dovish expectations surrounding the Federal Reserve's interest rate decisions. A potential rate cut of 25 basis points is anticipated, with some market participants speculating on the possibility of a more aggressive reduction of 50 basis points. This uncertainty combined with weak retail sales data may further pressure the USD in the near term.
On the other hand, the Turkish lira faces its own set of challenges. With inflation projected to reach 28.5% in 2025 and a goal of single-digit inflation by 2027, the Turkish central bank may be cautious in its monetary policy approach, as larger interest rate cuts become less likely in light of persistently high inflation. The recent termination of Turkey's FX-protected deposit scheme, which cost the government significantly, adds to the uncertainties affecting the TRY.
Market experts note that the USD/TRY rate, currently at 41.31, is approximately 1.9% above its three-month average of 40.53 and has remained stable within a 5.1% range from 39.35 to 41.34. This stability suggests a balancing act between the macroeconomic factors influencing both currencies.
Ongoing political unrest in Turkey, highlighted by the arrest of opposition leader Ekrem İmamoğlu, has raised concerns over investor confidence, further complicating the lira's prospects. As these factors play out, businesses and individuals engaged in international transactions should remain vigilant of how the evolving economic conditions may influence exchange rates in the coming months.
