Jun 07 2019

Turkish lira is undervalued, S&P analyst says

Turkey’s lira is “fundamentally undervalued“, Standard & Poor’s said, according to Reuters.

S&P Senior Director Frank Gill said that the value of the lira has allowed exports to perform really well, including service exports, Reuters reported on Thursday.

The Turkish lira has lost almost 10 percent of its value this year, adding to a decline of 28 percent in 2018. A cheaper lira gives Turkish exporters a price advantage when selling their goods abroad, but the currency’s losses have also pared demand for imports and pushed up inflation.

Export performance has been “one bright spot in the Turkish economy,“ Gill said.

Turkey’s economy sank into recession in the second half of last year. While the country posted positive quarter-on-quarter growth in the first quarter of 2019, many economists expect that to be followed by another contraction in the second quarter.

The lira fell 1 percent to 5.83 per dollar at 1:47 p.m. local time in Istanbul on Friday.

https://www.reuters.com/article/us-usa-turkey-f35-exclusive-idUSKCN1T802O