Turkish lira's carry return remains at global peak
Offering a 11.2% return since the beginning of the year, the Turkish lira became the fourth best-performing currency following Brazil, Argentina, and Colombia.
According to a Bloomberg analysis, while the Turkish lira's total carry return maintains its top position on a global scale, experts warned that caution should be exercised against potential early rate cuts.
Global Markets and Return Rates
According to an analysis published by Bloomberg News, the Turkish lira's total carry return continues to maintain its position at the highest levels on a global scale.
Turkish lira assets, which have offered a return of approximately 11.2% since the beginning of the year, were recorded as the fourth best-performing currency following Brazil, Argentina, and Colombia.
Year-End Interest Rate Expectations
In line with market expectations, a 250 basis point cut in the policy rate is projected by the end of the year.
Despite this potential cut, real interest rates in Turkey are estimated to remain quite high compared to global standards.
Evaluations by Foreign Investors
Kieran Curtis, Head of Emerging Market Debt at Aberdeen, stated that they tend to maintain their carry trade positions on the Turkish lira.
Curtis expressed that the current return potential is still at a satisfactory level considering global alternatives and the expected volatility balance.
Impact of Tax Regulations
Nafez Zouk, Debt Strategist at Aviva Investors, said that the tax regulations on the agenda would create a limited impact.
Zouk argued that these regulations would not lead to a radical change in the overall positioning of foreign investors.
Early Interest Rate Cut Warning
Experts pointed out that entering an early easing cycle in monetary policy could pose significant risks.
A warning was issued that a rate cut in September, before observing a permanent decline in inflation data, would be an early step.