Garanti BBVA Projects Dollar at 52 TL and Euro at 62.3 TL by End-2026

Garanti BBVA Investment has released its 2026 Financial Strategy Report, offering a comprehensive outlook on Turkey’s macroeconomic trajectory, exchange rates, monetary policy, and financial markets. According to the report, the institution expects the USD/TRY exchange rate to reach 52 and the EUR/TRY rate to climb to 62.3 by the end of 2026, reflecting a controlled but continued depreciation of the Turkish lira within a tight monetary policy framework.

The projections are anchored in a broader macroeconomic scenario that assumes the persistence of orthodox economic policies, a gradual disinflation process, and a sustained real appreciation of the Turkish lira, albeit at a slower pace than in previous years.

Exchange Rate Outlook: Controlled Depreciation, Continued Real Appreciation

Garanti BBVA’s base scenario anticipates that the Turkish lira will continue to appreciate in real terms in 2026, supported by tight monetary conditions and positive real interest rates. Despite this real appreciation, the nominal exchange rate is still expected to rise.

The report estimates year-end inflation (CPI) at 25.0% for 2026, while projecting the USD/TRY exchange rate at 52, implying an approximate 21% nominal increase in the dollar rate over the year. When inflation and exchange rate expectations are jointly considered, the bank calculates a real appreciation of the Turkish lira of around 6% in 2026. This compares with a stronger 10% real appreciation in 2025, signaling a moderation rather than a reversal of the trend.

According to the report, the key driver behind this dynamic is the continuation of tight monetary policy, which keeps real interest rates in positive territory. These conditions, Garanti BBVA notes, continue to attract demand for lira-denominated assets and support currency stability.

Inflation, Interest Rates, and Growth Expectations

Garanti BBVA’s macroeconomic forecasts for 2026 reflect a cautiously optimistic outlook. The institution projects:

Year-end inflation at 25.0%
Policy interest rate at 32.0%
Economic growth at 4.0%

The report emphasizes that maintaining restrictive monetary policy is essential to anchor inflation expectations and ensure the disinflation process remains on track. While inflation is expected to decline compared to previous years, Garanti BBVA underlines that price stability will remain a central policy challenge.

On the growth front, the projected 4.0% GDP expansion suggests a balance between economic activity and financial stability, with domestic demand recovering gradually while avoiding overheating risks.

Credit Rating Outlook: Potential Upgrades in 2026

One notable assessment in the report concerns Turkey’s sovereign credit rating. Garanti BBVA Investment suggests that Turkey could see further credit rating upgrades in 2026, provided that current policy discipline is preserved.

According to the analysis, Turkey remains three notches below investment-grade status when evaluated across Moody’s, S&P, and Fitch ratings. To close this gap, the report highlights several critical conditions:

Continuation of orthodox economic policies
Sustained disinflation
Ongoing real appreciation of the Turkish lira
Strong foreign exchange reserves
A current account deficit maintained at sustainable levels

If these criteria are met, Garanti BBVA believes that additional rating upgrades could materialize, improving Turkey’s risk perception and potentially lowering external financing costs.

Deposit Rates and Monetary Conditions

The report also addresses the outlook for deposit rates, noting the influence of macroprudential measures. Garanti BBVA expects TL deposit rates to remain 1–2 percentage points above the policy rate, reflecting regulatory constraints and competition among banks for lira funding.

Looking further ahead, the bank estimates that the net return on deposits could decline to the 25%–27% range by the final quarter of 2026, assuming no change in withholding tax rates. This gradual decline aligns with expectations of easing inflation and a normalization of financial conditions over time.

Equity Market Outlook: BIST-100 Projections

On the equity side, Garanti BBVA Investment provides a detailed assessment of the BIST-100 index. Based on analyses of company valuations conducted by its research department, the institution sets a year-end BIST-100 target of 16,100 points for 2026.

However, the report cautions that market dynamics may differ between the first and second halves of the year. Given the expectation that interest rates will remain relatively high in the early months, Garanti BBVA identifies the 12,600–13,000 range as a potential breakeven zone in the first half of 2026.

This range is described as a level at which upward momentum in equities could begin to weaken, particularly while high interest rates continue to offer attractive returns in fixed-income instruments. As monetary conditions gradually ease later in the year, equity markets could regain stronger momentum, provided macroeconomic stability is maintained.

A Measured Outlook for 2026

Overall, Garanti BBVA’s 2026 Financial Strategy Report presents a scenario of controlled normalization for the Turkish economy. While exchange rates are expected to rise in nominal terms, the continuation of positive real interest rates supports further real appreciation of the lira. Inflation is projected to decline but remain elevated, requiring policy discipline to stay in place.

At the same time, the potential for credit rating upgrades and improving financial conditions offers a cautiously constructive outlook for both fixed-income and equity investors. The report underscores that policy continuity and macroeconomic stability will be decisive factors shaping Turkey’s economic and market performance in 2026.