USD/TRY: Global monetary easing stops TRY’s free fall - Danske Bank

According to analysts from Danske Bank, the TRY is stabilising on a global turn in monetary easing, while a lower oil price could wipe away the extra burden on Turkey’s external position. They warn domestic risks has not disappeared.

Key Quotes: 

“Because of global monetary relief, we adjust our USD/TRY outlook, enhancing that the fragile domestic and geopolitical environment is still in place. Large FX debt redemptions by the Turkish private sector and expected rate cuts later in 2019 are set to weigh on the TRY in 2019 and 2020.”

“We remain bearish on the TRY in the long term, expecting the USD/TRY to reach the following levels: 5.70 (previously 6.10) in 1M, 5.90 in 3M, 5.90 in 6M and 6.20 in 12M.”

“Major downside risks to our TRY forecasts include more aggressive monetary easing than markets are pricing, further escalation of the trade war and geopolitical confrontation with the US on Russia’s air defence system.”