Fitch announced the fate of the Turkish lira. Here’s what will happen in the next 2 years

The Turkish lira lost more than 30 percent of its value in 2022 alone. Last year, the TL’s depreciation against the dollar was around 80 percent. Dollar/TL reached 18.22 on the last day of the week, and euro/TL reached 18.16 levels, seeing the new peaks of 2022.

Reuters reported yesterday that the net reserve of the Central Bank of the Republic of Turkey (CBRT) decreased to $12.6 billion in the week of August 26, decreasing by $1.26 billion compared to the previous week. Thus, the decline in two weeks exceeded 3 billion dollars. Bankers, who gave information to Reuters, stated that in recent weeks, 1-2 billion dollars of money was transferred from the central bank of another country to the Central Bank reserves.

FITCH: GULF BANKS ARE LOSSING DUE TO THEIR BRANCHES IN TURKEY

Fitch also announced that they expect the depreciation of TL to continue until 2024. Fitch stated that banks from the Gulf countries suffered losses due to their activities in Turkey. Stating that the conditions in Turkey are getting worse and worse, Fitch emphasized that the depreciation of the Turkish Lira has affected these banks.

According to Fitch, Gulf banks with branches in Turkey had a net loss of $950 million in the first half of 2022. It was announced that the banks that lost the most were NBD and KFH from the United Arab Emirates.

Fitch stated that they expect to see a similar reduction in the losses of these banks as inflation slowly declines in Turkey in the second half of 2022 and in 2023. The agency predicts that the TL will depreciate at least until 2024, but that Gulf banks will not leave the Turkish market despite these difficulties.

According to the organization, the loss of Burgan Bank in Turkey, as well as these two banks, accounted for more than 15 percent of their total profits.

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