Turkey: Act to stabilise the lira? - Rabobank

The selling pressure on the Turkish lira has increased after President Trump announced that the US will withdraw from the Iranian nuclear deal, notes the analysis team at Rabobank.

Key Quotes

“The announcement caused a further rise in oil prices to yet another year-to-date low, which doesn’t bode well for Turkey given that inflation is already in a double digit territory and the monetary policy is insufficiently supportive.”

“A few hours after the lira plunged to yet another record low Bloomberg reported that President Erdogan will hold a meeting at his palace at 12:00BST to discuss the sharp fall in the value of the Turkish currency with economy officials, including CBRT Governor Cetinkaya.”

“It remains to be seen whether the meeting results in concrete measures to support the lira, but it does support our argument that allowing the currency to fall precipitously - when Turks cast their votes in crucial presidential and general elections on June 24 - may yield an unpredictable outcome.”