Dollar/TL forecast from Bank of America

Bank of America expects the USD/TL to be at 38 by the end of the year. Bank of America Securities stated that both domestic and foreign investors have become more optimistic with the tightening of monetary policy in Turkey, and that the real sector has seen a significant slowdown in the economy, while banks have seen a shift away from the dollar. In the report titled “First quarter pessimism out, summer optimism in” published by BofA economists and strategists, including Zümrüt İmamoğlu, following their visit to Turkey, it was stated that “The private sector is now feeling the slowdown in the economy and believes that the monetary stance is sufficiently tight.” BofA stated that the positioning in Turkish lira and Turkish lira-denominated bonds is widespread and that the crowded positioning in TL and the inertia in inflation are seen as the most important sources of concern. “Since the local elections, domestic FX demand has reversed and in our discussions with banks, they said they see both individual investors and corporate companies on the selling side,” the report said, adding, “If the TL stabilizes, the trend toward reversal of dollarization could continue in the summer months. Given the high level of inflation, we expect the TL to lose some nominal value as capital inflows slow down.” BofA expects the Dollar/TL to be at 38 by the end of the year.