The Turkish lira is maintaining its impressive start to 2021 in the middle of the trading week, buoyed by positive economic data. Since November, the lira has been one of the top-performing currencies against the US dollar in foreign exchange markets, despite being one of the worst-performing throughout most of 2020. The worst may be behind Ankara, and this could bode well for the lira.
According to the Turkish Statistical Institute (TSI), retail sales rose 2.2% in November, beating the market forecast of 1.8%. This is down from the 4.3% gain in October. At an annualized rate, retail sales are up 11.9%, led by increases in receipts for food, medical goods, cosmetics, fuel, and e-commerce.
In Turkey, retail sales have expanded for six consecutive months.
Turkey reported its sixth straight month of expansion in the industrial sector, with output rising 11% year-over-year in November. This beat the median estimate of 9.55%. Ankara saw growth in mining, utilities, medium-high technology, and manufacturing.
Earlier this week, the government said that the October unemployment rate was unchanged at 12.7%. Officials also confirmed that the current account deficit widened to $4.06 billion in November.
Later this week, the latest foreign exchange reserves data and the federal budget balance will be released.
Turkish officials recently released their economic forecast for 2021, and they are optimistic that the nation can return from last year’s slump and grow by as much as 4% annually. Although coronavirus-related measures and higher interest rates may limit growth in the first half of 2021, market analysts believe the 4% estimate is possible.
Haluk Burumcekci, of Istanbul-based Burumceki Consulting, told Reuters that economic reforms and the overhaul of monetary and fiscal policy could help Turkey’s situation.
Even with low credit growth, it will not be difficult for the economy to grow 4% this year. We made a very good start to this year adopting steps to create a market friendly environment.
Goldman Sachs, meanwhile, is bullish on the lira. It anticipates a substantial rebound, but the financial institutions warned that there could be some pullback if the central bank chooses to ease rates and present “an unsustainable pro-growth bias once again.”
The USD/TRY currency pair fell 0.55% to 7.4119, from an opening of 7.4530, at 16:59 GMT on Wednesday. The EUR/TRY declined 0.88% to 9.0193, from an opening of 9.1000.