HSBC raises USD/TL expectation

HSBC predicted that the Turkish lira would weaken regardless of the outcome of the elections. The bank raised its year-end dollar/TL expectation, which it had previously announced as 21, to 24. A new one was added to the dollar/TL analyses of foreign banks for the post-election period. Like Morgan Stanley, HSBC also drew attention to the possibility that the Turkish lira would weaken regardless of the election results. The report, written by HSBC CEEEMEA Region Currency Strategist Murat Toprak, stated that the deteriorating fundamentals and signs that the TL is overvalued could lead to a wider correction in the exchange rate than the bank had previously anticipated. Following this assessment, the bank raised its year-end dollar/TL expectation from 21 to 24. The report underlined that the presidential and parliamentary elections could create changes in economic and monetary policy that could have an impact on the medium and long-term outlook of the Turkish lira. Drawing attention to the fact that the cyclical and structural fragilities of the Turkish lira are evident, the bank stated that, as they have emphasized in many previous reports, high negative interest rates, high current account deficit, lack of regular capital flows, low foreign exchange reserves and risks related to the sustainability of the liraization policy are the prominent challenges for the Turkish lira. Raised dollar/TL expectations Following these assessments, the bank raised its dollar/TL expectations on a quarterly basis. The bank, which previously shared its 19.5 estimate for the second quarter of the year, raised this estimate to 20. As of the end of the third quarter, the bank's dollar/TL expectation increased from 20 to 23. The year-end dollar/TL expectation was increased from 21 to 24.