Commerzbank’s Tatha Ghose reports that the Turkish Lira (TRY) remains under significant depreciation pressure due to persistent structural external imbalances. Turkey’s current-account deficit widened by 32% year-over-year to USD 1.5 billion in May, bringing the cumulative deficit for January to May to USD 30.7 billion and raising the 12-month rolling deficit to USD 37.3 billion, equivalent to -2.3% of GDP [1]. Ghose emphasizes that this deficit is structurally driven by a savings-investment gap, and that alternative measures excluding gold and energy are considered misleading [1].
On the financing side, portfolio inflows have remained weak, reflecting a lack of positive investor sentiment. After a brief USD 4.1 billion inflow in April, May saw a net outflow of USD 3.1 billion, with non-residents selling USD 2.8 billion in equities and investment fund shares and reducing their exposure to domestic government debt [1].
Turkey’s net foreign exchange reserves, excluding swaps, are estimated at around USD 30 billion following heavy interventions, which included a USD 33.3 billion reserve drawdown over the first five months of the year as authorities attempted to smooth the lira’s depreciation [1]. Ghose argues that this reserve level is not as high as officials sometimes claim and is insufficient to resolve the underlying imbalance between the current-account deficit and hesitant capital inflows [1].
Commerzbank concludes that, given these structural challenges and ongoing capital flight, the Turkish Lira is likely to continue facing depreciation pressure in the medium term [1].
CONCLUSION
Turkey’s widening current-account deficit, weak portfolio inflows, and declining FX reserves are keeping the Turkish Lira under sustained pressure. According to Commerzbank, these structural imbalances are unlikely to be resolved soon, suggesting continued depreciation risk for the lira.