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Robin Brooks, Chief Economist at the Institute of International Finance (IIF), expects Turkey’s current account deficit to narrow sharply in the second half of 2020 and support lira.

As such, the IIF is retaining its TRY fair value target of 7.5 per US dollar, despite the currency’s recent slide to a record low of 7.35 per US dollar.  The currency has depreciated by 5.18% this month and is down 23% on a year-to-date basis. 

The IIF changed TRY’s fair value twice early this year, first to 6.30 in early April and then to 7.50 a week ago. The fair value is a reflection of the credit impulse and its effect on the current account deficit.