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For the Turkish lira, the story of strengthening is over. Economists at Danske Bank see the USD/TRY pair at the 8.00-8.50 range in three months.

Key quotes

“USD/TRY to move higher as pricing of a regime shift has faded.”

“TRY weakened 10 % after president Erdogan fired the central bank governor Naci Agbal but changing winds for the dollar increased pressure. From here, we see USD/TRY to drift into the 8.00-8.50 range.”  

“We think slowing inflation and using FX reserves may limit the weakening in TRY spot.”