Dollar and inflation forecast for Turkey from US banking giant

Wells Fargo International Economist and FX Strategist Brendan McKenna has evaluated year-end inflation expectations in Turkey and made a forecast for the dollar exchange rate.

In a written statement to Safa Gümüş from CNBC-e, McKenna stated that inflation at the end of the year would likely be positioned between 55 percent and 60 percent, well above official expectations.

'YEAR-END INFLATION COULD BE NEAR 55-60 PERCENT'

McKenna noted the following: "An inflation rate of 38 percent at the end of the year seems ambitious to me. I would have expected the Central Bank to keep interest rates at current levels until the end of this year, but such a magnitude of disinflation might not materialize even with a 50 percent policy interest rate. I expect year-end inflation to be close to 55-60 percent."

McKenna stated that as the country adheres more strictly to 'rational' economic policies and the credibility of institutions increases over the next 12 to 24 months, rating agencies could improve Turkey's credit rating.

The Wells Fargo strategist expressed the following: "As Turkey's policy framework shifts in a more orthodox direction and institutions regain their credibility, I expect additional credit rating upgrades to occur within the next 12-24 months."

WHAT WILL HAPPEN TO THE DOLLAR AT THE END OF THE YEAR?

McKenna announced his year-end expectation for the dollar/TL parity as 32.5 TL, stating that current levels in the parity are at a peak and that they expect the TL to recover gradually by the end of the year.

News Source: 12punto