Istanbul – Goldman Sachs, one of the significant investment banks in the United States, signals a real value gain in the Turkish lira (TL) and expects the net reserves of the Central Bank of the Republic of Turkey (CBRT) to turn positive this year.
In the bank’s report titled “10 CEEMEA Questions for 2024,” it is answered affirmatively to the question, “Will the Turkish lira lose less value than predicted?”
The report highlights a significant tightening in monetary and financial conditions since September, contributing to the moderate performance of domestic demand and the slowdown of consecutive price pressures.
The report notes that with the return of real interest rates to positive territory, there is an increasing trend in foreign currency inflows.
According to the report, the CBRT signals comfort regarding the Turkish lira gaining at least some real value. Considering this, the report suggests that the increased foreign currency inflows and the narrowing current account deficit will limit the depreciation rate of the Turkish lira in 2024.
The report emphasizes that the rebalancing of demand also improves Turkey’s external balances. It predicts that the current account deficit, which was 4.1% of GDP in 2023, will decrease to 1.8% in 2024.
Highlighting that it is more likely for the CBRT to focus on restructuring its balance sheet rather than allowing nominal strengthening of the Turkish lira, the report states, “We believe it is likely that CBRT’s net reserves, including both legs of bilateral and bank swaps, which are currently negative at $49 billion, will turn positive in 2024.”
This positive outlook from Goldman Sachs suggests a potential improvement in Turkey’s economic indicators and the resilience of the Turkish lira in the coming year.
source: aa.com.tr / prepared by Melisa Beğiç