Goldman Sachs: The decline of the TL will slow down, interest rate cuts will be effective.

Goldman Sachs' Forecasts on TL and Interest Rate Cuts

Analysts Kamakshya Trivedi and Michael Cahill forecast in their global exchange rate reports dated January 10 that the interest rate cuts by the Central Bank of the Republic of Turkey will slow down the decline of the Turkish Lira. Experts evaluate this situation as a factor that will balance the decrease in carry positions. Monthly returns on the lira are expected to remain around %1-1.5.

Appreciation of the Trade-Weighted Exchange Rate

The report highlights that policymakers will not allow the trade-weighted real exchange rate to appreciate significantly. This is seen as an indication of efforts to maintain stability in the markets.

Market Risks and Adverse Shock Scenarios

Goldman Sachs emphasizes that the liquidity of the foreign exchange markets in Turkey is still low and that high positioning could lead to a rapid reversal in the face of potential adverse shocks. This situation could increase uncertainties in the financial markets.