Outlook on TRY remains cautious – Danske Bank

Strategist at Danske Bank Vladimir Miklashevsky gave his view on the Turkish currency.

Key Quotes

“Disinflation has stopped, keeping the central bank on the hawkish side. On 14 September, Turkey’s central bank (the TCMB) kept all its rates unchanged, as inflation remains elevated. We expect more signs of monetary easing inception to arise, which should restrain TRY’s appreciation on improving macro conditions”.

“We see weaker prospects for the TRY in the short term as carry trades become overcrowded and any weakening could cause a mass exodus. Carry trade longs in the TRY have created a bottleneck as local FX liquidity has become squeezed. We stay cautious in the medium to long term”.