Goldman Sachs Sees Turkish Lira Fall To 28.00 Against The Dollar In 12 Months

LONDON, June 4 (Reuters) – Goldman Sachs revised its forecast for the Turkish lira in the wake of President Tayyip Erdogan’s cabinet overhaul, saying it now expected the currency to weaken to 28 against the dollar in 12 months compared to a previous prediction of 22 .

Erdogan signaled on Saturday that his newly elected government would return to more orthodox economic policies when he appointed Mehmet Simsek to his cabinet to deal with Turkey’s cost-of-living crisis and other tensions.

“We think it is a matter of when rather than if the currency weakens significantly, with the likelihood of a larger one-time adjustment increasing,” Wall Street bank analysts said in a note released after Erdogan announced his new top team. had announced.

“We believe that the choice of Mehmet Simsek as the new finance and finance minister increases the likelihood that monetary policy will shift in a more orthodox direction.”

The bank said it expects the lira to weaken to USD 23.00, USD 25.00 and USD 28.00 in three, six and 12 months, respectively. This compares to an earlier forecast of 7:00 PM, 9:00 PM, and 10:00 PM, respectively.

Depending on events, the $28.00 level could be reached in less than a year, the analysts said. Similarly, a larger-than-expected rate adjustment could mean the Lira may need to weaken less than predicted, they added.

The lira has lost more than 90% of its value in the past decade, with the economy gripped by boom-and-bust cycles and rampant inflationary bouts that topped 40% in April, while the key interest rate is currently at at 8.5%

Reporting by Karin Strohecker; Edited by Emelia Sithole-Matarise

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