Macroeconomic Forecast Turkey

According to the most recent data released by the CBRT, the Turkish central bank's foreign currency reserves (excluding gold) fell for the fourth consecutive month in October, hitting US$84.8bn, down from US$93.7bn back in June. As the bank is expected to remain on the defensive with respect to the weakening currency, we see growing downside risks to our forecast for foreign currency reserves to end 2012 at US$84.7bn. A more concerted drawdown in reserves would only magnify already sizeable balance of payments pressures.

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