Bank of America forecasts Türkiye’s inflation, dollar rates
Bank of America (BofA), one of the world’s largest banks, has penned a report on Türkiye’s economic outlook.
Released by BofA economists and strategists, including Zumrut Imamoglu, the report titled “Out with First Quarter Pessimism, In with Summer Optimism” also includes forecasts regarding the dollar/TL exchange rate.
Dollar forecast by the end of 2024
The report includes statements suggesting that considering the high inflation level and the slowdown in capital inflows, there may be some nominal depreciation in the Turkish lira (₺) by the end of the year.
It is noted in the report that there could be a slight increase in the dollar/TRY exchange rate by the year-end.
The report states, “An increase in foreign exchange reserves at the Central Bank of the Republic of Türkiye (CBRT) is expected by year-end. We anticipate the dollar/TRY exchange rate to be 38 by the end of 2024.”
Inflation forecast by the end of 2024
Bank of America analysts also revealed their inflation forecast for the end of 2024, estimating it at 42%.
Key points highlighted in the report include:
- Expectations of a slowdown in domestic demand and credit growth remain below the 2% mark. This is expected to be observed in both consumer and commercial credits.
- Due to high interest rates, a shift towards foreign currency deposits instead of the Turkish Lira is anticipated. A resolution in foreign currency deposits is expected, especially if the Turkish Lira stabilizes during the summer months.
- An increase in the CBRT foreign exchange reserves is expected by the end of the year. A forecast of 38 for the dollar/TL exchange rate by the end of 2024 is provided.
- Tight monetary policy and support for the new economic program have led to a more positive sentiment among both local and foreign investors.
- Banks are observing the beginning of a process of de-dollarization. Continued progression of this process is anticipated.
