Turkish Lira to Reign Supreme: Economist Atilla Yeşilada Forecasts Strong TL Throughout 2026

End of the Dollar Era: Yeşilada Bets on Lira Strength

Leading Turkish economist Atilla Yeşilada has delivered a bold forecast, asserting that investors who remain positioned in the US Dollar (USD) against the Turkish Lira (TL) will face real losses. In a recent detailed analysis, Yeşilada argued that the current Turkish Lira appreciation policy is sustainable, backed by robust interest rate differentials and sufficient central bank support.

Yeşilada’s key currency predictions are based on the assumption that the government will continue to prioritize a disinflationary path supported by tight monetary policy:

• 2025 Year-End Devaluation: The economist forecasts that the Dolar/TL pair will see a devaluation rate of 25% to 27% by the end of the year, which is significantly below the anticipated year-end inflation rate (estimated around 32%). This implies a substantial real appreciation of the Lira for the remainder of the year.
• 2026 Outlook: Looking ahead, Yeşilada predicts that the Dolar/TL devaluation will remain contained at 20% throughout 2026, against an expected inflation rate of 25%.
• Investor Advice: Yeşilada stressed that locals are currently earning attractive interest rates on TL deposits. He issued a clear message: “Money kept in dollars will lose value,” reinforcing his strong conviction that the Turkish Lira’s “kingdom will continue.” He stated his position is so firm that he’d be willing to sell “put options” on the USD/TL if he could.

Central Bank Under Pressure: No Rate Cuts Until 2026

Analyzing the Central Bank of the Republic of Turkey’s (TCMB) recent 100-basis-point interest rate cut—a move widely seen as less aggressive than the market’s 150 bps expectation—Yeşilada suggested the decision confirms the TCMB is not acting solely under political guidance.

However, he cautioned that the disinflation trend faces significant headwinds:

• Inflation Reality: Yeşilada stated that a meaningful slowdown in the core inflation trend in October and November is impossible, citing global external shocks, particularly the surge in petroleum prices triggered by new US sanctions targeting Russian oil trade.
• Monetary Stance: The economist does not anticipate any further rate cuts until the first quarter of 2026 (January-March). He argues that the TCMB must maintain its tight stance, potentially even signaling a willingness to hike rates if necessary to keep its credibility intact, especially if a serious recession is to be avoided.

Stocks and Gold: Caution Advised as Season Ends

BIST 100: The Rally is Over

For the Borsa Istanbul (BIST 100), Yeşilada advised caution, suggesting that the current upward movements are not the start of a new rally. He predicts the trading season is drawing to a close, forecasting a year-end closing level around 9,000 points.

Factors capping the rally include:

• Fiscal Tightening: The government’s new tax reform package and increased efforts to tackle the informal economy are expected to significantly raise the tax burden on corporations, dampening earnings potential.
• Geopolitical Risks: Persistent high geopolitical uncertainty, combined with TCMB’s less-than-expected rate cut, will continue to limit upside momentum.

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Gold: Time for Profit-Taking

Yeşilada confirmed widespread concerns of a gold price bubble following its sharp gains.

• Unprecedented Gains: With gold having delivered approximately 60% gains in dollar terms and 80% in Turkish Lira terms this year, Yeşilada advised investors to take profits.
• Portfolio Shift: He recommends that intelligent investors should sell assets that have already delivered such substantial gains and rotate capital into other assets, specifically mentioning Bitcoin and cryptocurrencies, which have lagged behind but fall into a similar risk/reward category.