Commerzbank lifts USD/TRY forecast, eyes lira slipping beyond 40

Europe’s largest bank, German Commerzbank, revised its USD/TRY forecast upward, raising it to 42 by the end of this year and 46 by the end of 2026 amid escalating political tensions in Türkiye.

The revision comes in the wake of recent political developments, particularly a corruption probe targeting Istanbul Metropolitan Municipality Mayor Ekrem Imamoglu, which triggered a market downturn between March 19 and 21.

During this period, the Turkish lira plunged over 12% before trimming its losses, following central bank interventions that involved selling $25 billion from its reserves.

The USD/TRY exchange rate stood at 37.9472 as of Monday, 1200 GMT.

Commerzbank analyst Tatha Ghose warned that prolonged instability could have serious economic repercussions. “If political tensions continue, the Turkish lira will likely come under renewed pressure,” Ghose stated.

Ghose added that such a scenario could strain Türkiye’s international relations, especially with Western allies, and could lead to costly interventions by the central bank to stabilize the currency.

“In this scenario, daily interventions to support the lira would be expensive and ultimately unsustainable. Continued depreciation would likely accelerate inflation, which remains one of the most pressing issues in Türkiye’s economy,” Ghose said.

Türkiye’s inflation continued to improve in February, marking its ninth consecutive monthly decline and easing to 39.05%—a better-than-expected figure. Meanwhile, the central bank cut its policy rate to 42.5%, delivering its third consecutive 250-basis-point reduction.