JPMorgan's post-election predictions

The analysts from the institution stated that despite the possibility of returning to orthodox policies in the post-election scenarios, they expect a depreciation of the Turkish Lira due to high volatility, with the USD/TRY reaching levels around 24-25, taking into account factors such as companies' demand for foreign currency and the Central Bank's goal of increasing its reserves.

The statement also included the expression, "In a scenario where orthodox macroeconomic policies are adopted afterwards, a real trend of value gain in the Lira may be observed."

The analysts predicted that the fair value for 5-10 year bond yields is between 26-33%, and in a scenario where inflation-targeted orthodox policies are implemented, interest rates may reach their peak at 25%. They also stated that they do not expect significant changes in bond yields after the election, assuming that current macroeconomic policies continue, but there may be a moderate increase later.

Expectation of an increase in policy interest rates

The analysts expect that if the Central Bank returns to orthodox policies, it may increase the policy interest rate from 8.5% to 30% in the third quarter of the year, and there is also a possibility of it rising to 40%. They also stated that if there is not enough increase in interest rates in the third quarter, macroeconomic imbalances may increase and require further interest rate hikes.

It was emphasized that growth in Turkey could also decrease in 2023 due to the impact of global slowdown. The prediction was shared that there will be a growth of 2.5% in 2023.

In previous days, Citi economists had also stated in their reports on the post-election period in Turkey that with the easing of regulations and the recovery seen in the risk premium, the Turkish Lira could appreciate by 12% in a year.