Turkish lira shows resilience as dollar stabilizes, economists predict upward trend

In the free market, the dollar started the day at TL 32.3110, while the euro began trading at TL 34.9690, and the price of a gram of gold commenced at TL 2,280.

Economists forecast a potential range of 40.53 to 41.70 for the dollar by the end of 2024, with similar incremental increases. "The Turkish lira could declare victory in this scenario. Sticking with TL appears much more sensible," they stated. 

Price of dollar and euro on March 28

In the free market, the dollar began trading at TL 32.31, while in the Grand Bazaar, it was priced at TL 32.66. The euro price on March 28 is also listed at TL 35.16.

It's been a week since the Central Bank of the Republic of Türkiye (CBRT) meeting, where it raised its policy rate by 500 basis points to 50%. During this period, the dollar hit a low of 31.75. However, in Thursday's transactions, the exchange rate has approached pre-central bank decision levels.

The difference in value between the two currencies, which had grown to 3% 10 days ago, has now narrowed to 1%. Economists see this shrinking gap as a sign that panic buying has subsided and prices are starting to adjust more logically.

Yesterday, the dollar's selling price was TL 32.27, and the euro's selling price was TL 34.905.

Price of gram of gold on March 28

On March 28, the price of a gram of gold started trading at TL 2,280 in the free market. While yesterday's closing saw a 1% increase, in the Grand Bazaar, the gram price is listed at TL 2,445 on the selling side.

In the morning hours, a quarter of gold was sold for TL 4,163, half a gold for TL 8,060 and full gold for TL 6,265. The spot price of gold in global markets starts the new day with a 0.70% premium at $2195.

Expectations and analysis for dollar in 2024

According to calculations by economist Altug Ozaslan, the dollar's daily appreciation averaged 0.13% from September 2023. Ozaslan suggests that if this rate continues until the end of the year, the dollar-to-Turkish lira exchange rate could reach approximately 41.70.

Expectations and targets for gold in 2024

While the gold index remains strong at around 104.35, U.S. 10-year bond yields are holding steady at 4.21.

Despite this, analysts note a continued enthusiasm for gold, citing recent geopolitical risks from Russia and Israel, increased demand from central banks, and expectations of interest rate cuts in the U.S., particularly in June.

TL deposits or dollars?

Both the CBRT's survey results and economists' predictions highlight an approximate 25% dollar increase. However, Turkish lira deposit returns have been 41.25% higher over the past nine months compared to today's rates.

Turkish lira deposits seem to yield more than dollars. Moreover, declining inflation, a decrease in the current account deficit, increased foreign exchange inflows to the country, and anticipated Fed rate cuts could diminish expectations for the dollar.

'Hold on to your Turkish liras'

It's known that some foreign institutions forecast the year-end dollar within the TL 36 to TL 38 range.

"Turkish Lira liquid funds and deposits are currently offering very high annual returns, ranging from 55% to 60%. While I wouldn't expect such returns in U.S. dollars, this does create an interesting situation. Due to the current exchange rate environment, it's possible to achieve real gains in dollar terms by simply holding onto your TL," said Tufan Deriner, co-founder of Istanbul Portfolio. 

Source: Newsroom