Monday, August 13, 2018

Early this year we identified the Lira as significantly overvalued, given last year’s policy mix that widened the current account deficit. However, Lira depreciation had erased that misalignment weeks ago, and it is now significantly undershooting our estimate for fair value. Against this backdrop, we assess balance of payments funding needs, which are sizeable even with a current account deficit that is shrinking.

IIF Authors

Sergi Lanau

Sergi
Lanau
Deputy Chief Economist
slanau@iif.com

Ugras Ulku

Ugras
Ulku
Deputy Head of EM Europe Research
+1-202-857-3617
uulku@iif.com

Jonathan Fortun

Jonathan
Fortun
Associate Economist
@econchart
jfortun@iif.com

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