USD/TRY: Playing against the Turkish lira – TDS

Today, the Turkish lira hit a new all-time low at 7.2496 vs USD. The prior USD/TRY high from 13 August 2018 stood at 7.2362. Cristian Maggio, a strategist at TD Securities, analyzes the Turkish lira outlook.

Key quotes

“The structural imbalances of Turkey simply continue to drive the lira on an ever-depreciatory trajectory against the dollar. This could be seen as the result of elevated inflation differentials between the US and Turkey, which have averaged no less than 8 percentage points in the past several years.”

“Unresolved structural issues will continue to play against the lira, while the CBRT's reserve burn that has helped contain further weakness is not sustainable, we expect significant more weakening going forward.”