David Finnerty, an analyst at Bloomberg, predicts that the Turkish lira will stop its decline for the sixth consecutive month on July 3 1 day. At that time, the inflation report of the Turkish central bank will be concerned, and investors will look for new clues for the central bank to deal with rising prices.
Turkey's July CPI will be announced in three days. Although policymakers have been stabilizing the economy since the crisis broke out at the beginning of this century, the monthly inflation rate in June exceeded 15%, the highest level in more than a decade.
After the Turkish central bank unexpectedly kept the benchmark interest rate unchanged this week, it showed that it was still unwilling to take action, and prices rose rapidly, which inevitably made traders expect the US dollar to remain high against the lira.
As Turkish President Recep Tayyip Erdogan has always believed that low interest rates will reduce inflation and intends to strengthen control over economic and monetary policies, the lira has been on a downward trend against the US dollar. Recently, the United States threatened to impose tariffs on an American priest detained in Turkey, which increased the pressure on the Turkish currency.
Other fundamental factors are also incompatible with the lira, especially the current account deficit, which makes it dependent on foreign funds. But if interest rates are not enough to make up for soaring inflation, it is difficult for international investors to be interested.
Analysts' views on the lira are slightly worse, and even if inflation data next week show that price pressure is easing, the credibility of these data will be questioned. The lira is the worst-performing major emerging currency this year after the Argentine peso, and people are worried that the worst may yet come.