USD/TRY exchange rate is on the rise once again as the Turkish elections are nearing. The nationwide elections will be held on May 14 as the incumbent Erdogan government faces a strong rival. The prevailing uncertainty in the country has resulted in an unprecedented rise in inflation due to the surging dollar to the Lira exchange rate.
The Turkish Lira has been in a tailspin for the past few years, and there are multiple reasons behind its weakness. The situation has significantly impacted the cost of living in the country, making things very tough for the working class.
Dollar To Lira vs DXY Index
According to the most recent Turkish Lira news, the Turkish central bank has decided not to lower the interest rates in its latest meeting. This marks the second consecutive meeting without a rate cut. In February 2023, the rates were lowered by 50 bps in order to support the economic activity in the earthquake-affected region.
The most concerning thing is the fact that the USD/TRY has continued to rally despite a weakening US dollar. The surging US Dollar to Lira exchange rate shows that while both currencies are losing their value, the latter is devaluing even more.
USD/TRY May Keep Surging Till The Elections
Due to the prevailing economic uncertainty and record inflation in the country, USD/TRY pair is expected to keep facing headwinds in the coming weeks. The upcoming elections have become very crucial for the future of the Turkish Lira. The highly unorthodox approach by the current government has been the biggest factor behind the downfall of its national currency.
USD/TRY forecast by JPMorgan analysts is bearish even after the elections. This is due to the fact that the analysts don’t expect a major shift in the country’s current approach towards inflation and the falling interest rate. The dollar strength (DXY) index will be another factor affecting the exchange rate.
I’ll keep sharing my updated outlook on the Turkish Lira in my free Telegram group, which you’re welcome to join.