Goldman Sachs commenting on the Turkish Lira

The bank expects the positive momentum to return but for the time being it is not positive enough to invest. Both global and global factors have been favorable to the Turkish lira in recent weeks. Lower interest rates and current oil prices continue to exert a favorable influence on Turkish assets, and the risk is further exacerbated by the relationship between Turkey and the United States and the upcoming elections.

It is because of this situation that GS predicts further interest rate cuts and their forecast for the Turkish economy for this year is for better performance than expected. However, Goldman's economists expect the development of the Turkish economy to remain limited due to negative fiscal stimuli and a reduction in corporate profits. Looking ahead, the bank assumes that while the global monetary environment remains good, it will continue to have a positive effect on the Turkish lira. Carry trades are declining, but remain relatively high, and there is still no significant gain in net positions or investor positioning. Local dollarisation remains high and foreign debt diminishes. Despite the good prospects for TRY, the bank remains cautious about the pound as a place to invest due to the banking sector, economic development and possible economic reforms.

Graphs: Used with permission of Bloomberg Finance L.P.

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