USD/TRY: Steady trend as carry trade appeal returns – ING

Turkish Lira Holds Firm as Carry Trades Make a Comeback

According to ING analysts Muhammet Mercan, Frantisek Taborsky, and James Wilson, the Turkish Lira (TRY) has found stability following the easing of tensions between the US and Iran. The Central Bank of Turkey (CBT) has played a key role in sustaining market trust and keeping the USD/TRY exchange rate on a steady course.

They observe that, much like other emerging markets, Turkey has benefited from the recent reduction in geopolitical risks. The central bank has managed to uphold confidence in the market, aided by proactive communication from officials in recent weeks.

During the period of heightened US-Iran tensions, investors sharply reduced their long positions in the Turkish Lira—cutting them by about half. At the same time, the CBT’s foreign exchange reserves dropped from a high of $210 billion to around $161 billion, mirroring a broader sell-off in global gold markets. However, the latest data indicates that investors are once again increasing their exposure to the Lira, reflecting a more optimistic global outlook.

Looking ahead, the analysts anticipate that the USD/TRY rate will move gradually toward 46.6 by mid-2026, with the market expected to slowly rebuild long carry positions in the Turkish Lira.

(This report was produced with the assistance of artificial intelligence and subsequently reviewed by an editor.)