TRY Changing gear

Research evidence excerpt

TRY Changing gear

19 May 2026

TRY CurrenciesCEEMEA

Changing gear

◆ A significant shift in CBRT’s FX policy is unlikely… Murat Toprak

CEEMEA FX Strategist

◆ …but we raised our USD-TRY year-end forecast to 50.0… HSBC Bank plc

murat.toprak@hsbcib.com

+44 20 7991 5415

◆ …as higher inflation and a wider current account deficit could

lead to faster TRY depreciation than we initially anticipated

A material change in the Turkish central bank’s FX policy framework appears

unlikely. The CBRT continues to deploy a broad toolkit (higher rates, FX swap

operations, and direct FX provision, among other measures) to mitigate the risk of a

disorderly depreciation in TRY (Chart 1). This stance remains consistent with the dual

objective of disinflation and containing dollarisation risks. Officials reiterated this

approach during the 14 May press conference (Bloomberg).

Nonetheless, in the latest Currency Outlook (Currency Outlook - Stuck), we raised

our year-end USD-TRY forecast to 50.0, up from 48.0, previously.

There are two main reasons behind this change:

1. The interplay between inflation and FX has become TRY-adverse

We believe the cumulative rise in domestic prices since the start of the year is

increasingly challenging the current FX policy stance and the managed, gradual

upward trajectory in USD-TRY.

Inflation rose by 14.6% in the first four months of 2026. Chart 2 shows that inflation

remains persistently elevated despite the significant tightening of monetary policy since

2023. While some of the current pressures reflect exceptional factors beyond the central

bank’s direct control, it is difficult to ignore that year-to-date inflation is higher than over

the same period last year. Year-end inflation expectations have also increased sharply,