The Turkish lira is the talk of the town to start the week
The currency plunged to a low of 8.47 against the dollar earlier today, opening with a gap of over 15% after the removal of Turkish central bank governor, Naci Agbal.
Société Générale’s London-based strategist, Phoenix Kalen, argues that the move by Erdogan leaves the country “beyond the point of no return” and that may lead to a fresh record low in the lira – forecasting a move to 9.70 against the dollar in Q2.
“Without much remaining reserves to defend the currency, and considering an expected exodus in foreign and local investor capital, it may be difficult for Turkey to avoid another currency crisis in the coming months.”
The firm now forecasts USD/TRY at 9.70 in Q2, 9.0 by Q3 before settling at 9.30 in Q4.