Deutsche Bank Forecasts Turkish Lira Depreciation, Predicts Year-End Exchange Rates

Deutsche Bank has released its economic outlook for Turkey in the second half of 2026, offering projections for the country's currency, interest rates, and economic growth.

The bank anticipates that the Central Bank of the Republic of Turkey (TCMB) will maintain its tight monetary policy while implementing cautious interest rate cuts in the latter half of the year. The policy rate is expected to decline from the current 37% to 36% by the end of the third quarter, further decreasing to 35% by the end of 2026 and 31% by the end of 2027.

Regarding currency exchange rates, Deutsche Bank forecasts that the US Dollar to Turkish Lira (USD/TL) will reach 51 by the end of 2026 and 65 by the end of 2027. The Euro to Turkish Lira (EUR/TL) is projected to be 63.8 at the close of 2026.

The report highlights that the Turkish Lira has appreciated considerably in real terms due to high real interest rates. However, this appreciation has reportedly fueled import consumption and contributed to a negative balance in foreign direct investment (FDI) for the first time in two decades, raising concerns about the currency's real valuation. Despite these concerns, the bank suggests that tourism revenues and a potential decline in gold prices could offer short-term support to the Turkish Lira.

Deutsche Bank projects Turkey's economy to grow by 3% in 2026. The average inflation forecast for the year is 6.5%, with the current account deficit expected to be 2.9% of national income and the budget deficit at 3.5% of national income.