Surprise dollar prediction after the election from the US giant bank: It gave a date… – Last Minute Economic News

Surprise dollar prediction after the election from the US giant bank: It gave a date… – Last Minute Economic News

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The US giant bank Wells Fargo, which put forward a long-term cautiously optimistic perspective on the Turkish Lira at the beginning of 2024, shared its long-term constructive views on the Turkish lira after the local elections with its latest report. “with increasing faith” He repeated what he said.

According to Ekonomim, the US Dollar has reached its peak against the Turkish Lira this year. Wells FargoHe repeated his view that the exchange rate will fall below 30 TL in 2025.

The following statements were made in the report published by Wells Fargo:

“At the beginning of this year, we officially expressed a long-term cautiously optimistic view on the Turkish lira, a notable change of view after years of pessimism. With local elections behind us and a continued commitment to policy and economic orthodoxy, the Turkish lira We reiterate with increasing confidence our long-term constructive view on the issue.

Since the start of the CBRT tightening cycle, market participants have responded positively to Turkish assets. Credit default swap spreads on Turkish government debt have narrowed significantly and emerging markets have converged to the dominant dollar-debt CDS spread index. In fact, since the start of the CBRT tightening cycle, Turkey’s spreads have narrowed by over 205 basis points, while the EMBI index has narrowed by only 91 basis points.

Additionally, there was political uncertainty ahead of local elections, which led to a premium for the US dollar compared to the official USD/TRY exchange rate when converting TL to US currency. However, with uncertainty about local elections in the past, this dollar premium has diminished and official and unofficial exchange rates have converged, leaving only a small but normal premium for the US dollar.

In our view, the convergence of exchange rates and the decline of the dollar premium reflects increasing optimism about the future value of the lira. For the lira, the combination of improving domestic political dynamics, the independence of a reliable monetary authority and non-interference with Turkey’s democratic system should result in a stronger currency over time. In this sense, as we have stated before, we reiterate our constructive view for the Turkish Lira, this time with greater conviction, and believe that the worst of Turkey’s currency problems are probably in the past.

‘BATTERIES OF VOLATILITY MAY EXPERIENCE Occasionally IN THE LIRA’

However, we think that the lira may experience occasional bouts of volatility. However, we believe that volatility in the lira will be temporary – assuming no major political disruption or reversal of recent policy actions – and the currency will tend to strengthen by the end of the year.

The forecast horizon is currently through the end of Q3 2025. In this sense, we believe that the USD/TRY exchange rate has peaked this year and will fall below 30.00 TL in mid-2025.”

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