 Bank of Tokyo-Mitsubishi UFJ analysts say their 12-month forecast for the Turkish Lira stands at 1.47 to the US dollar. AA photo |
The Turkish Lira may be among the best-performing currencies in the new year, according to two currency strategists at the Bank of Tokyo-Mitsubishi UFJ.
Derek Halpenny and Lee Hardman wrote in a report Wednesday that the lira may appreciate against the greenback due to the strength of the Turkish economy.
“Any negative spillover implications on the Turkish economy are likely to prove limited, with activity rebounding strongly by around 7 percent in 2010,” the report said. “A moderation in growth back toward 5 percent in 2011 is no cause for concern.”
The strength of Turkey’s economic recovery has prompted a sharp acceleration in net portfolio inflows, which totaled $17.9 billion in the first 10 months of 2010, the analysts noted.
“The pick-up in capital inflows has helped finance Turkey’s re-widening current account deficit, which is on course to expand toward 5 percent of GDP in 2010,” they said. “The prospect of further [interest] rate cuts in early 2011 could weigh on the lira. Turkey’s public finances remain relatively healthy with its cyclically adjusted primary balance close to flat and gross public debt just above 30 percent of GDP.”
A credit rating upgrade to investment grade is “likely at some point,” the analysts said, adding that in such a case, they expect the lira to “strengthen modestly.”
The analysts’ 12-month forecast for the lira stands at 1.47 per dollar, a 5 percent appreciation compared to Wednesday’s 1.55.
Derek Halpenny and Lee Hardman wrote in a report Wednesday that the lira may appreciate against the greenback due to the strength of the Turkish economy.
“Any negative spillover implications on the Turkish economy are likely to prove limited, with activity rebounding strongly by around 7 percent in 2010,” the report said. “A moderation in growth back toward 5 percent in 2011 is no cause for concern.”
The strength of Turkey’s economic recovery has prompted a sharp acceleration in net portfolio inflows, which totaled $17.9 billion in the first 10 months of 2010, the analysts noted.
“The pick-up in capital inflows has helped finance Turkey’s re-widening current account deficit, which is on course to expand toward 5 percent of GDP in 2010,” they said. “The prospect of further [interest] rate cuts in early 2011 could weigh on the lira. Turkey’s public finances remain relatively healthy with its cyclically adjusted primary balance close to flat and gross public debt just above 30 percent of GDP.”
A credit rating upgrade to investment grade is “likely at some point,” the analysts said, adding that in such a case, they expect the lira to “strengthen modestly.”
The analysts’ 12-month forecast for the lira stands at 1.47 per dollar, a 5 percent appreciation compared to Wednesday’s 1.55.
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