Turkey’s Twin Threats: Inflation and the Lira Are Colliding

Turkey's economic risks are stacking up again. Veteran analyst Erdal Sağlam, writing for ANKA, warns that inflation is proving far stickier than policymakers hoped, while currency pressures are quietly rebuilding beneath the surface. The combination is a familiar and dangerous one for anyone who lived through Turkey's recent crises.

The core problem is that disinflation — the slowdown in price increases — is losing momentum. Sticky services inflation, elevated food prices, and a lira that remains vulnerable to global risk appetite are preventing the Central Bank from declaring victory. Sağlam's analysis suggests the road to single-digit inflation is longer and bumpier than the official narrative implies.

For ordinary Turks and businesses, this matters immediately. A lira under pressure means import costs stay high, which feeds back into prices at the shelf and at the pump. For businesses carrying dollar-denominated debt or importing raw materials, the risk window is not closing — it may be reopening. The weekly analysis lands at a moment when markets are watching whether Turkey's monetary discipline holds or whether political and economic pressures begin to crack it.

Levent KAYIRA Commentary: Ekonomik Gündem Analysis: Sağlam's framing of 'growing risks' in inflation and the exchange rate is not alarmism — it reflects what the data is quietly showing. The Central Bank's rate-hold strategy works only as long as the lira holds. The moment the dollar/TRY rate starts climbing with momentum, the entire disinflation story gets repriced overnight.

From my years on trading desks at Kocbank and Garanti, I watched this exact dynamic play out repeatedly. Currency stability buys time, but it doesn't fix fundamentals. Right now, Turkey's current account deficit remains a structural drag, and global dollar strength — driven by a Fed in no hurry to cut — is an external headwind Ankara cannot control.

The practical number to watch: if USD/TRY pushes sustainably above 38-39, expect a new wave of cost-push inflation to hit Turkish businesses within 6-8 weeks. That's the transmission lag from exchange rate to shelf price that I tracked for 15 years.

For investors in Turkish assets, this is not a sell signal yet — but it is a clear warning to tighten hedges and shorten duration on lira-denominated positions.

Kaynak: Google News Ekonomi