Jul 02 2018

Turkish lira to weaken to 5 per dollar – Morgan Stanley

Turkey’s lira is set to weaken to beyond 5 per dollar in the final quarter of this year, according to Morgan Stanley.

The lira will fall to 5.05 against the U.S. currency by the year-end, Morgan Stanley said in a report, according to Cumhuriyet newspaper.

Economic growth in Turkey will slow after the central bank raised rates by 500 basis points this year to 17.75 percent to halt losses for the currency, Morgan Stanley said. The slowdown began in the second quarter, after 7.4 percent growth in the first three months, and the expansion is expected to total 4.2 percent in the year as a whole, it said.

Risks to the growth estimate are leaning clearly to the downside and will depend on central bank policy in the remainder of the year, Morgan Stanley said, according to the newspaper.

The lira weakened 0.9 percent to 4.63 per dollar in Istanbul on Monday.