Turkish Lira Prospects in 2018

The Effect of Donald Trump’s Policies are Limited on the Lira

Turkish Lira has been mentioned numerously on the international financial news articles for the past couple of months thanks to the increasing political volatility created by the political powerhouses United States, Russia and China.

Suddenly barraged by back to back news originating from the U.S. President Donald Trump about trade tariffs on China, heavy sanctions against Russia and missiles to Syria, Turkish financial markets moved into an emergency mode where scenarios from Trade War to World War started to get priced.

“In hours, Turkish Lira recovered almost half of what it lost to Donald Trump’s unorthodox foreign policy antics.”

 

While Donald Trump’s actions played a significant role in the Turkish Lira losing 10.5 percent of its value in 29 days from March to April, critical orders from the government to the Turkish Central Bank and consequent tightening policies balanced the markets. On April 18th, the declaration by President Tayyip Erdoğan that Turkey will go to an early election in late June further strengthened the Lira on an expectation of a dissipating political uncertainty.

Turkish Lira Set to Outperform in Second Half of 2018

Turkey is one of the Emerging Market countries where it is proud of the reforms done in the last 15 years, the government has significant expertise in running the economy, banking system is based on a strong financial foundation and the ruling AK Party has a vision beyond tomorrow. These benefits of these factors will be crystallized after the elections in June with the removal of political uncertainty.

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MaQasid Portfolio Management publications are produced by MaQasid Portföy Yönetimi A.Ş., a Turkey based portfolio management company registered with the Capital Markets Board of Turkey. The information and opinions herein are for general information use only. MaQasid Portföy Yönetimi A.Ş. does not guarantee their accuracy or completeness, nor does MaQasid Portföy Yönetimi A.Ş. assume any liability for any loss that may result from the reliance by any person upon any such information or opinions. Such information and opinions are subject to change without notice, are for general information only and are not intended as an offer or solicitation with respect to the purchase or sales of any security or as personalized investment advice.