Turkey's Year-End Trajectory: Market Expectations Amid Interest Rate and Currency Pressure

Turkish markets have reached a critical threshold where macroeconomic balances are being redefined as they enter the final quarter of 2026. Investors and financial institutions are focusing on interest rate policies and exchange rate volatility, which will determine the success of the fight against inflation.

The Inflation Spiral and the Test of Monetary Policy

Market participants are focusing on how long the Central Bank's tightening cycle will be maintained while forming year-end projections. While inflation is expected to trend downward due to the base effect, financing costs on the real sector remain the primary risk factor.

■Interest Rates: Policy rates are expected to remain aligned with inflation expectations.

■Currency Pressure: Stabilization efforts in the USD/TRY parity continue to impact inflation via import costs.

■Liquidity Management: The sterilization of excess liquidity in the market will be decisive for year-end targets.

Variables on the Radar of Institutional Investors

In financial markets, the USD/TRY exchange rate is monitored not just as a currency conversion, but as a leading indicator of foreign capital inflows. Year-end expectations are directly linked to Turkey's potential for credit rating upgrades and the trend in CDS premiums.

This uncertainty in macroeconomic indicators is delaying investment decisions in capital-intensive sectors such as automotive and heavy industry. Specifically, the gap between FX-based input costs and TRY-based sales revenues will continue to pressure manufacturers' profitability margins. While high interest rates limit domestic vehicle demand by restricting access to consumer loans, stabilization in the exchange rate remains the only viable path for long-term capacity expansions.