Turkey's lira currency will depreciate over the next year at a far slower rate than expected six months ago, according to a Reuters poll of analysts who saw a slowing but robust economic recovery.
Surging capital flows pushed the lira to a two-year high against the dollar last week, as high-yielding emerging markets benefited from expectations the United States will soon resume pumping cash into markets by purchasing Treasury debt.
Few analysts in the last poll in March accurately forecast the extent of the lira's appreciation to around 1.427 against the dollar now, a rally coinciding with a strong economic recovery after a contraction of almost 5 percent in 2009.
The latest survey of around 30 analysts showed the lira weakening modestly to 1.45 in three months, 1.47 in six months and 1.50 in a year's time.
While Turkish economic growth will slow in 2011 in tandem with major Western export markets, forecasters expect the lira to hold its value well despite uncertainty about vast budget austerity measures in European Union states.
"Once risk aversion dissipates, the lira should re-appreciate, supported by rather robust growth momentum, higher interest rates and investors' appetite for large emerging markets," said Guilliame Tresca of Credit Agricole-CIB. Having underperformed emerging market peers last year, the Turkish economy should expand by around 7.3 percent this year, the poll showed - a sizeable upgrade from the 4.1 percent forecast in March.
The government forecasts economic growth of 6.8 percent this year, among the fastest rates in the world. The poll showed the Turkish economy expanding around 4.3 percent next year and 4.5 percent in 2012 - still below the high single-digit rates seen in the years before the global financial crisis and ensuing Great Recession.
Recent economic data have been surprisingly strong, with August industrial output posting a monthly rise 2.7 percent, well above forecasts.
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