Turkey's lira is expected to rise just under 7 percent against the dollar in 2012, a Reuters poll showed, only a fraction of the roughly 20 percent fall last year that made it one of 2011's worst-performing emerging market currencies. The Turkish central bank has intervened aggressively in the currency market since December 30 after the lira hit a record low of 1.9215 to the dollar on December 28.
Turkey's big current account deficit has also weighed on the lira at a time when all emerging market currencies have felt the chill of investor risk aversion thanks to Europe's sovereign debt crisis.
"In the short-term, Europe-rooted problems and their reflection on other economies will continue to impact the lira negatively," said Tufan Comert, a strategist at Garanti Securities. "We don't expect a meaningful appreciation in the lira anytime soon."
The latest survey of 30 analysts showed the lira strengthening slightly to 1.86 to the dollar in three months, 1.80 in six months and 1.76 in a year, compared with around 1.885 against the dollar on Thursday.
These consensus forecasts were considerably weaker than the 1.82, 1.79, and 1.74 per dollar for three, six and 12 months polled in October. The consensus then was for the lira to trade at 1.82 around now.
SHARP DECLINE The lira's decline against the dollar in 2011 was far steeper than a 12 percent fall in Brazil's real and a 16 percent fall in the Polish zloty, and similar to the 22 percent drop in South Africa's rand. See Fuelled by a red-hot economy that the government expects grew more than 7.5 percent last year, the current account deficit was expected to be around 10 percent of gross domestic product by end-2011.
But growth is widely expected to slow this year. The International Monetary Fund predicts growth will fall to 2 percent, and some analysts are even more pessimistic. The Turkish government's medium-term economic plan anticipated growth of 4 percent in 2012.