The Turkish lira weakened towards 7.5 per US dollar on Friday, after President Tayyip Erdogan said that high interest rates do not serve Turkey, raising concerns about the central bank's commitment to tight monetary policy that markets see as essential to bring inflation down. The latest inflation report showed the country's consumer prices rose 14.6% in December, the most since August 2019 and well above the central bank's 3%-7% target. Early this week, economic data showed the country's industrial production and retail trade continued to expand at solid rates in November, despite the imposition of tighter controls to contain the spread of the pandemic. The lira was among the worst-performing EM currencies in 2020, having touched a record low of 8.6 against the greenback last month due to concerns over inflationary pressures, depleting foreign exchange reserves and geopolitical tensions.
Historically, the Turkish Lira reached an all time high of 8.58 in November of 2020. Turkish Lira - data, forecasts, historical chart - was last updated on January of 2021.
The Turkish Lira is expected to trade at 7.47 by the end of this quarter, according to Trading Economics global macro models and analysts expectations. Looking forward, we estimate it to trade at 7.73 in 12 months time.