Last week’s emergency rate hike by Turkey’s central bank has caused a rebound in the lira and past experience suggests that the rally may have a bit further to run over the coming weeks. But there are a number of potential flashpoints on the horizon and the more fundamental point is that Turkey remains among the most vulnerable EMs to any deterioration in global investor sentiment. We therefore expect the lira to come under pressure again towards the end of this year and to weaken further in 2019-20.
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