September 25
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The Turkish lira could fall to 21 lira per dollar by June next year, when the country is due to hold presidential and parliamentary elections, said British bank HSBC.

HSBC revised its estimate for the end of June 2022 from 18.2 lira per dollar, BloombergHT reported, citing the bank's report.

The lira was trading down 0.4 percent to 17.96 per dollar on Wednesday, meaning HSBC expects it to weaken by nearly 15 percent by June next year. The currency has lost more than a quarter of its value in 2022 after falling 44 percent last year.

HSBC also revised its year-end forecast for the lira to 19.5 per dollar from 17.5. The lira depreciated after a widening current account deficit, a spike in inflation to 79.6 percent led to more negative real interest rates, and initial enthusiasm for the government's so-called liraization strategy, which included the introduction of bank deposit accounts in lira linked to the dollar in December, said Murat Toprak, HSBC currency strategist for Central and Eastern Europe, Middle East and Africa.

The main macro risk for the Turkish lira relates to the dynamics of the balance of payments, the deterioration of which is larger than expected, he said. According to him, the foreign trade deficit, which is close to record levels, leads to a broader current account deficit even at a time when the tourism sector should be the strongest.

Toprak noted that the lira will depreciate more significantly in the fall, when revenues from seasonal tourism will be less favorable and exports will continue to weaken due to recessionary pressures in Europe.

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