EM Alpha: Entry point is attractive: short USDTRY in 2m forward

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EM Alpha: Entry point is attractive: short USDTRY in 2m forward

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EM Alpha

Entry point is attractive: short USDTRY in

2m forward

Risk repricing improves entry point 26 May 2026

We recommend going short USDTRY in the 2m forward at 48.8 (spot reference: 45.9, GEM FI & FX Strategy

carry: c. 3.3% per month) and plan to hold it until maturity, when we will assess whether Emerging Markets Global

to re-enter the trade. Rising domestic political uncertainty has led to a repricing of risk, Mikhail Liluashvili

creating a more attractive entry point, in our view (Exhibit 1). The risks are much higher EEMEA Local Markets Strategist

oil prices, stronger broader USD, persistent local dollarization, intensifying geopolitical MLImikhail.liluashvili@bofa.com(UK)

backdrop and resident capital outflows abroad . Hande Kucuk

Authorities remain committed to real appreciation TurkeyMLI (UK)& Israel Economist

The authorities remain firmly committed to real appreciation of the TRY vs the USD, and hande.kucuk@bofa.com

to keeping the real policy rate in positive territory This means that the TRY should DavidGlobal EMHauner,FI/FX CFAStrategist>>

depreciate less than forwards imply. Indeed, the central bank has managed to MLI (UK)

david.hauner@bofa.com

consistently deliver depreciation that is lower than monthly carry (Exhibit 2).

EEMEA FI Strategy & Economics

Reserves exceed foreign positioning MLI (UK)

Liquid FX reserves stood at USD37bn on May 15, and could be further supported GEMsBofAS FI Strategy & Economics

through the CBRT’s use of gold/FX swaps and, if needed, direct gold sales. Usable See Team Page for List of Analysts

reserves exceed total forward foreign positioning, which stood around USD30bn as of

May 15.