USD/TRY: Lira to rally sharply and significantly on regime change in Türkiye – Wells Fargo

Turkish general elections are set to take place in Q2-2023. Economists at Wells Fargo analyze how the outcome of the presidential election could impact the Lira (TRY).

TRY can hold steady if President Erdogan retains office

“Should President Erdogan retain office, the Turkish Lira likely hovers around current levels through the end of the election cycle. Longer-term, as economic trends and monetary policy frameworks go unchanged, large one-off TRY depreciations could materialize, but at a minimum we expect lira depreciation through the middle of 2024. We believe USD/TRY can reach 19.50 by Q4-2023 and trend to 20.00 by mid-2024. ” 

“In our regime change scenario, the Lira could experience one of the most sizable rallies in modern history as an independent central bank gets restored and an orthodox monetary policy framework is implemented. In this scenario, USD/TRY can end 2023 around 15.00 and reach 14.00 by mid-2024.”