Goldman says strengthening of Turkish lira could be limited by building up reserves

(Reuters) – Goldman Sachs said its three-month forecast for the Turkish lira was 7.00-7.50 per dollar and further strengthening may be limited by central bank efforts to rebuild reserves .

The lira has strengthened since early December when the central bank announced that it would keep monetary policy tight in the new year and that it was ready to raise interest rates further if necessary to bring the lira down. inflation in a sustainable manner.

Goldman said in the three-month forecast note that “the currency’s strength may ultimately be limited by a necessary attempt to rebuild (foreign exchange) reserves.

Regarding the outlook for the six to 12 month lira, Goldman’s Tom Arnold wrote that the forecast was 7.00 and 7.50, up from 7.75 and 8.00 previously, reflecting “the likelihood that the magnitude of the appreciation of reading it may be limited ”.

The governor said in December that the central bank was forecasting 9.4% inflation by the end of 2021 and targeting 5% in 2023.