EUR/TRY to trade at 3.30 in 3 months

New general elections are scheduled for 1 November in Turkey. Political uncertainty is high. The central bank adds to uncertainty by announcing changes to its monetary policy instruments. Political pressure still prevents tightening. EUR/TRY is likley to trade at 3.30 in 3 months, said Nordea Bank.

The timing of the move to new instruments of benchmark policy rate is highly uncertain. Risks remain clearly skewed towards higher rates in the near term, as political risks remain high. 

"We have decided to change our forecast to reflect a new benchmark policy rate which could be set around 9%", states Nordea Bank.