Turkish Market Sees Slight Dollar Rise, Inflation Expectations Tick Up

Turkish market participants anticipate a slight rise in the year-end dollar exchange rate, according to the Central Bank of the Republic of Turkey's July Market Participants Survey. The survey, which polled 65 participants from the real and financial sectors, indicates a subtle shift in economic outlook.

Inflation expectations saw a marginal increase. The forecast for consumer price index (CPI) growth in July rose to 1.68% from 1.57% in the previous survey. For the end of the year, inflation expectations climbed to 29.21% from 29.14%, and for the next 12 months, it increased to 23.95% from 23.81%. However, expectations for 24 months ahead saw a slight decrease, falling to 17.83% from 17.89%.

The outlook for the dollar also reflects these shifts. The year-end dollar/TL expectation increased slightly to 51.5537 from 51.4692. Conversely, the expectation for the dollar/TL rate 12 months from now dipped to 55.6920 from 55.7196.

Economic growth forecasts were slightly tempered. The Gross Domestic Product (GDP) growth expectation for the current year was revised down to 3.1% from 3.2%. The forecast for next year's GDP growth remains at 4.1%. Expectations regarding the Central Bank's policy rate also showed a downward trend for the medium term, with the rate expected to be 37% after the first meeting, 36.55% after the second, and 35.73% after the third, falling to 29.44% after 12 months.