The Turkish lira is significantly below fair value at the moment and should strengthen over the next one to two years as Turkey's economy slows and exports gain strength, improving the country's balance of payments outlook, economists for the Institute of International Finance said on Wednesday.
Speaking on a media conference call about market turbulence in Turkey and other emerging markets, IIF chief economist Robin Brooks said that fair value for the Turkish lira, based on macroeconomic fundamentals, "is somewhere around 5 to 5.50" to the dollar.
The lira was trading around 6.08 to the dollar on Tuesday after hitting a low of 7.24 on Monday amid market concerns about a high current account deficit, President Recep Tayyip Erdogan's opposition to higher interest rates and a widening trade row with the United States.
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