Turkish Lira Gains as CBRT Signals Extended Tight Stance
Lira gained 0.6% on hawkish CBRT guidance.
The Turkish lira strengthened 0.6% to 44.55 per dollar on Tuesday after Central Bank of the Republic of Turkey Deputy Governor delivered unexpectedly hawkish guidance, signaling that the bank's tight monetary stance would extend well into 2027. The comments pushed back firmly against market expectations of rate cuts beginning in the fourth quarter of 2026.
The hawkish rhetoric came as annual inflation fell to 28.4% in March, continuing a steady decline from a peak of 75% in May 2024. However, the central bank emphasized that core inflation, while also declining, remains uncomfortably high at 22.1%, and that services sector inflation has proven particularly sticky at 31.5%. The bank reiterated its commitment to bringing inflation into single digits by 2028.
The BIST 100 index rose 1.2% on the day, with banking stocks outperforming the broader market as investors priced in a longer period of elevated net interest margins for Turkish lenders. Garanti BBVA, Is Bank, and Akbank all gained between 1.5% and 2.3%. Foreign investors have returned $4.1 billion to Turkish assets in 2026, a dramatic reversal from the $8 billion outflow recorded in 2024.
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