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Turkish lira forecast: Will the TRY drop further?

By Nicole Willing

Edited by Georgy Istigechev


Turkish lira coins and notes on a Turkish flag
The Turkish lira (TRY) has lost close to 40% YTD against the US dollar – Photo: rozdemir /

The Turkish lira (TRY), having continued to decline in value against most major global currencies since start of this year, appears to have stabilised since early October 2022, thanks to nearly 100 new regulations adopted by the country’s central bank ahead of Turkey’s elections in 2023.

The lira has lost close to 40% year-to-date (YTD) against the US dollar (USD/TRY) after plunging by 46% in 2021, driven by President Tayyip Erdogan’s unconventional views on addressing inflation by cutting interest rates rather than lifting them.

In its most recent move, the Central Bank of Turkey (CBT) cut its interest rate by 150 basis points (bps) to 10.5% in its October 2022 meeting, surpassing expectations of a 100bps cut, and signaled that it would take the same step in the next meeting to end the rate-cutting cycle. The decision added to the 850bps in unorthodox rate cuts since September of 2021 despite a plunging lira, soaring consumer prices and an unbalanced current account.

Inflation crossed 83% in September, according to data from the Turkish Statistical Institute cited by TradingEconomics – the highest level since 1998 – primarily due to surging costs of importing energy with an increasingly weak currency.

Is there a trading opportunity for foreign exchange (forex) investors in going long or short on the lira following the currency’s nosedive against the dollar? This article looks at the lira’s recent performance, analysts’ expectations and Turkish lira forecasts.

USD/TRY live price chart

Monetary policy drives lira to collapse

The Turkish lira started 2021 at around 7.37 against the US dollar and steadily shed value throughout the year. The USD/TRY rate fell to 9.69 at the end of October 2021, and then dropped to a record low, reaching 16.42 on 12 December.

“The seeds for the ongoing lira crisis were sown when CBT governor, Sahap Kavcioglu, launched an unconventional monetary policy experiment, attempting to cure high inflation by lowering interest rates,” wrote Tatha Ghose, FX and emerging markets (EM) analyst at Germany’s Commerzbank in a TRY analysis in mid-May. “They were not sown by Turkish households spontaneously deciding to move towards FX deposits instead of their domestic currency. 

“Cutting rates is President Tayyip Erdogan’s now familiar view of how monetary policy should work. CBT attempted to find conventional justifications for rate cuts, such as inflation was high because of transitory factors and that core inflation was lower than observed headline inflation. But such arguments do not make sense because even the core inflation rate is many multiples of the inflation target, and this has been the case for a decade (nothing related to recent transitory factors) – other central banks would not dream of lowering interest rates against such a backdrop,” Ghose added.

Turkey’s central bank cut the country’s key interest rate by 150 basis points to 10.5% in its October meeting. The CBT has so far cut rates by 850bps since September 2021, while inflation has hit 20-year highs.

The situation surrounding the lira is now coinciding with rising prices for energy and other commodities driven by the Russia-Ukraine conflict, further exacerbating inflation by driving up the cost of Turkish imports.

Muhammet Mercan, chief economist for Turkey at Dutch bank ING, recently wrote that the CBT will likely end its easing cycle in November:

“While inflationary pressures remained broad-based in October as all 12 main CPI categories contributed positively to the increase in inflation, the Central Bank of Turkey has signalled that it intends to conclude the easing cycle with another 150bp rate cut in November. This will bring the policy rate to 9.0%.”

Will the Turkish lira go up or down?

The value of the lira is weakening at a time of particular strength in the value of the US dollar. The US dollar index (DXY), which measures the dollar against a basket of currencies, hit a fresh 20-year high of 114 points in late September 2022, but the growth has since subsided, with the index trading around the 107 level as of 21 November.

The USD/TRY exchange rate moved to the 11 level in late December as the lira attempted to rebound from the crash, but has resumed its decline in 2022, with the pair returning to the record 18 mark, trading at 18.6 as of 21 November.

The currency appears to have stabilised following policy interventions by the central bank, which “rely largely on foreign funds obtained from export revenues, foreign homebuyers and other sources to finely balance the market’s supply and demand”, a group of officials and economists recently told Reuters.

Per Hammarlund, chief EM strategist at Swedish bank SEB, wrote on 11 May that “rising US and global interest rates in combination with slowing growth is a toxic brew for EM risk appetite in general and for Turkey in particular… With elections looming in June 2023, Erdogan will prioritise growth over inflation, which will keep building the pressure on the lira.”

The EUR/TRY currency pair moved from the 9 lira-per-euro mark at the start of 2021 to 18.45 in the December collapse. The rate moved back to 12.07 as it attempted to rebound, but the lira weakness moved the Turkish currency past the 19 mark in mid-November. The EUR/TRY rate traded around that level as of 21 November, with the lira having shed close to 26% of its value against the euro on a year-to-date basis.

EUR/TRY live price chart

The GBP/TRY pair moved from the 10 lira-per-pound mark at the start of 2021 to 21.73 in December, moving back to 14.26 before the lira resumed its decline. The pound sterling has gained close to 5% against the lira over the past month and 22% over the past year.

The GBP/TRY rate was trading around 22 on 21 November.

GBP/TRY live price chart

What is the outlook for the Turkish currency, given the country’s monetary policy path and the international macroeconomic backdrop? We look at the latest Turkish lira future predictions from analysts below.

Turkish lira forecast: Can TRY stabilise or will it shed further value?

“The lira exchange rate has temporarily stabilised after the government and central bank launched rescue measures, such as incentives to convert FX deposits to lira deposits and forced conversion of export earnings in order to increase dollar supply in the market. The approach is called ‘lira-ization’ of the economy,” Commerzbank’s Ghose wrote.


0.67 Price
-0.330% 1D Chg, %
Long position overnight fee -0.0066%
Short position overnight fee -0.0016%
Overnight fee time 21:00 (UTC)
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0.67 Price
-0.330% 1D Chg, %
Long position overnight fee -0.0066%
Short position overnight fee -0.0016%
Overnight fee time 21:00 (UTC)
Spread 0.00030


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+0.080% 1D Chg, %
Long position overnight fee 0.0108%
Short position overnight fee -0.0190%
Overnight fee time 21:00 (UTC)
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-0.290% 1D Chg, %
Long position overnight fee -0.0046%
Short position overnight fee -0.0036%
Overnight fee time 21:00 (UTC)
Spread 0.00170

“These policies do not address the core problem of inconsistent monetary policy and non-credible central bank. Already there are media reports that banks are having to intervene in FX to hold up the lira... After a brief pause, we anticipate the next big move in USD-TRY.

“We anticipate pressure to return to the exchange rate over the coming two quarters, which will likely create more stress for the financial system and the central bank, ultimately forcing at least an interim reversal via emergency rate hikes. Ultimately, though, rate hikes by CBT under the current policy framework will not be credible and the lira will likely establish a renewed depreciation path through 2023. Precisely when and how this policy experiment will be abandoned remains completely unclear.”

Hammarlund also expected the lira to fall further, noting: “In the coming weeks, we expect either the depreciation of the lira to accelerate, or some form of action by the CBRT or government to stabilise the currency (perhaps a tax or interest rate incentive to buy TRY). With the current account deficit widening, inflation at 70%, and the REER rising, stability in USD/TRY is unsustainable.”

In early September, ING’s Muhammet Mercan outlined that Turkey’s current monetary setup appeared to show little signs of support for currency:

“While trying to limit growth in selected commercial loan types, the CBT has also taken some steps recently to control banks’ pricing decisions and the composition of loan portfolios. These steps also aim to support demand for government bonds. Given this backdrop, policymakers’ objectives have remained to keep financial conditions supportive.

“Gross reserves rose markedly recently thanks to an increase in the banking sector’s FX deposits translating into higher FX reserve requirements as well as swap transactions with banks.

“While a slowdown in lending should be supportive for the lira, continuing high external financing needs, the less supportive global backdrop and the policy preference to maintain low rates should remain key factors determining the currency outlook.”

TRY Exchange Rates (2017-22)

Turkish lira forecast 2022-2025

Analyst consensus indicated that there could be scope for further weakness in the value of the Turkish lira. 

USD/TRY forecasts

The TRY prediction from Danske Bank was the most bearish, with the bank’s analysts forecasting that the USD/TRY rate could reach the 25 level in 12 months’ time.

“As long as an acute financial crisis can be avoided, the move is likely to be gradual,” the bank commented in a research note on 2 September 2022.

ING forecast that the 20 mark could be breached earlier, with the rate potentially hitting 21.20 in four months’ time – i.e. during Q1 2023 – and reaching 23.30 by the third quarter of 2023.

TradingEconomics was also bearish in its Turkish lira projections as of 21 November, forecasting that the USD/TRY rate could move from 19.6429 at the end of this quarter to 23.1040 in a year’s time.

In its Turkish lira forecast for 2022, algorithm-based forecast website WalletInvestor saw the USD/TRY currency pair ending the year at the 18.992 mark. The website’s Turkish lira forecast for 2023 saw the currency declining further against the US dollar, ending the year at a potential average of 22.901.

Based on historical data, the platform issued a longer-term prediction than most banks – its Turkish lira forecast 2025 predicted that USD/TRY would trade at an average of 30.727 by the end of that year.

EUR/TRY forecasts

Commerzbank saw the lira continuing to shed value against the euro in its TRY forecast. The bank expected the EUR/TRY rate to reach 20.34 in the third quarter and 20.88 in the fourth quarter, before rebounding to 17.92 by the fourth quarter of 2023.

Similar to its USD/TRY forecast, TradingEconomics predicted the EUR/TRY rate could rise from 19.9557 by the end of this quarter to 22.3700 in a year’s time.

GBP/TRY forecasts

Additionally, TradingEconomics expected a GBP/TRY rate of 22.8973 by the end of this quarter and 25.4107 in 12 months’ time.

Due to market volatility, no bank or algorithm-based forecast website issued a Turkish lira forecast 2030.

When looking for Turkish lira future predictions, it’s important to bear in mind that analysts’ forecasts can be wrong. Analysts’ expectations are based on making a fundamental and technical study of the currency pair’s performance. However, past performance is not a guarantee of future results. 

Do your own research and always remember your decision to trade depends on your attitude to risk, your expertise in this market, the spread of your portfolio and how comfortable you feel about losing money. Never trade more money than you can afford to lose.


Will the Turkish lira get stronger in 2022?

The Turkish lira has collapsed against the US and European currencies as the country’s monetary policy has kept interest rates low rather than raising them to combat runaway inflation rates.

Forecasts from financial analysts, such as those at Danske Bank and ING, and algorithm-based websites such as WalletInvestor, are all factoring in a continuing potential decline for the lira against the US dollar, the euro and the British pound.

However, remember that analysts can and do get their predictions wrong. Always do your own research.

Will the Turkish lira rise?

The Turkish lira fell to a record low against the US dollar in its December currency crisis, and remains under pressure from other currencies on a combination of monetary policy, dollar strength and rising energy prices caused by the Russia-Ukraine conflict.

As the Turkish central bank is signalling further interest rate cuts are to come in the face of 80% inflation, it is unclear as to what factors could support the currency going forward. 

Is it a good time to buy Turkish lira?

The majority of financial analysts and algorithm-based websites have forecast long-term declines for the Turkish lira against most major global currencies, such as the US dollar, British pound and euro.

Whether USD/TRY, EUR/TRY or GBP/TRY is a good investment for you or not will depend on your portfolio composition, investment goals and risk profile, among other factors. 

Different trading strategies will suit different investment goals with a short or long-term focus. Remember, currency pairs can be highly volatile. You should do your own research, and never invest money you cannot afford to lose.

Markets in this article

36.11011 USD
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-0.28315 -0.660%
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33.14378 USD
-0.06089 -0.180%

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