BLBG:Turkish Lira Seen Leading Lead World Currencies in 2012, Reversing Slump
The lira, the second-worst performing currency after South Africa’s rand this year, will lead global gains in the first half of 2012 as Turkey pares its record current-account deficit, according to the median of estimates from more than 20 banks on Bloomberg.
The lira is set to rally 4.4 percent by the end of June for the biggest gain against the dollar among 33 global currencies ranked by Bloomberg, the survey shows. The lira will be the first to benefit from a revival of risk appetite as the European debt crisis is expected to be resolved by March, Benoit Anne, chief emerging-market strategist at Societe Generale SA in London, said in e-mailed comments.
“Turkey is less exposed to recession risks and will again be a prime investment destination,” said Anne who expects the lira to surge 17.5 percent next year to 1.60.
The lira has fallen 18 percent this year, closing past the 1.9 per dollar level on Dec. 19 for the first time. Turkey has the highest current-account deficit among the 60 countries monitored by the International Monetary Fund at 10.2 percent of the Gross domestic Product. Inflation accelerated to 9.5 percent in November, the highest in 19 months, as the central bank cut its benchmark interest rate to a record low of 5.75%.
Turkey’s 12-month deficit peaked in October and the cumulative deficit will shrink toward 7.5 percent of GDP next year as lira’s depreciation makes imports more expensive and exports cheaper, according to Tevfik Aksoy, Morgan Stanley’s London-based chief economist for the Central and Eastern Europe, Middle East and Africa region.
Option traders are turning less bearish on the lira, reducing the premium to sell the currency to 3.4 percentage points more than the contracts to buy it, down from a year-high of 6.3 percentage points on Sept. 26, according to data compiled by Bloomberg.
Nineteen out of 21 banks expect the lira to strengthen to 1.80 or below in the fourth quarter of 2012, according to estimates with Bloomberg. Eleven banks expect the lira to weaken to 1.88 or above during the first quarter. Any depreciation to 2 per dollar would be an “obviously oversold level,” Mats Olausson, emerging-markets strategist at Skandinaviska Enskilda Banken AB in Stockholm, said by phone.
To contact the reporter on this story: Selcuk Gokoluk in Istanbul at sgokoluk@bloomberg.net
To contact the editor responsible for this story: Gavin Serkin at gserkin@bloomberg.net
