Lira at the worst annual performance since 1994, Turkey’s real yield is at its lowest level in at least 10 years. The market expects inflation to reach 50% by spring 2022 unless the direction of monetary policy was reversed.
On 2nd Dec, Fitch Ratings downgraded Turkey’s sovereign outlook to negative on premature interest rate cuts and lira slide. Fitch highlighted that lira depreciation could reignite external financing pressures. The current strength in lira is unsustainable, expected to trade at 16.00/USD by June 2022 and 17.74/USD by Dec 2022.
