Turkey analysis from American investment giant: Date given for elections

A major US-based bank, one of the key players in global financial markets, reported in its latest analysis of the Turkish economy that it maintains its positive outlook on the Turkish Lira. The bank's report emphasized that currencies of emerging markets are under pressure due to a decline in global risk appetite. However, it was noted that movements in the Dollar/TL parity in Turkey have remained limited due to the impact of foreign exchange sales by state banks.

The recent levels of the Dollar/TL largely align with the projected slow depreciation process. Real money inflows from abroad at the beginning of the week pointed to a complex picture that led to short-term volatility.

While closely monitoring Turkish markets, the bank stated that no significant increase in the tendency of domestic investors toward foreign currency has been observed in the near term. It was particularly noted that there is no serious signal of dollarization.

Regarding the political environment, it was stated that risks have decreased somewhat in recent weeks. However, it was noted that the course of political developments will continue to be monitored following the submission of the dossier prepared for the lifting of the parliamentary immunity of main opposition party leader Özgür Özel to the commission.

Furthermore, the bank emphasized that its baseline expectation for the general election calendar in Turkey points to a period near the end of 2027.

Strong inflows from abroad last week brought about an increase in the country's foreign exchange reserves. Net reserves, excluding swap transactions, are once again approaching the 30 billion dollar threshold.

Experts are of the opinion that the sustainability of the current foreign exchange policies could become difficult in the long term if reserve growth stops or if the behavior of domestic investors is not supportive. On the other hand, it is stated that seasonal improvements in the current account balance could contribute to the strengthening of the TL in the short term in the coming period.

As the main agenda item in the foreign exchange market, the June inflation figures to be announced next week stand out. According to the analysis, under current conditions where the dollar is strong on a global scale, inflation data that could be announced above expectations may lead to a nominal depreciation of the Turkish Lira that remains below inflation but is accelerating.

News Source: 12punto