Goldman Sachs Alerts of Turbulence in Turkish Forex Market

US bank Goldman Sachs warned of the possibility of turmoil in the Turkish foreign exchange market ahead of the upcoming presidential and parliamentary elections.

The lira has declined by about 30 percent against the dollar over the past year, and this comes after a reduction in the balance of foreign exchange reserves of the Central Bank of Turkey and other financial measures taken to stabilize the exchange rate of the dollar against the lira.

Markets are looking forward to see if the upcoming elections will lead to a result that will lead to fundamental changes in economic policy.

Goldman Sachs believes that the authorities may intervene in the foreign exchange market as the election approaches and may continue to support economic measures such as deposits in lira that are insured against exchange rate fluctuations.

He added that the lira could continue to decline despite this support and that the depreciation of the lira could not be stopped by the continuation of this policy, pointing to the decline in Turkey’s foreign exchange reserves in recent years.

The bank expects Turkey’s foreign exchange reserves after the devastating Kahramanmaras earthquake to be just $42 billion after excluding illiquid assets such as gold.

Source: Zaman newspaper.

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