Turkish lira holds firm after wild ride

Turkey’s lira continued a stable trend on Wednesday, in sharp contrast to a volatile plunge last month, as analysts predicted inflation would soar as high as 50% and the World Bank cut economic growth forecasts.

The lira firmed as far as 13.73 to the dollar in early trade and was steady at 13.795 by 0824 GMT.

Thanks in part to authorities’ market inventions that helped calm a full-blown crisis late last year, the currency has held in a 13.7-13.94 range in the last week. It shed 44% of its value in 2021 and weakened another 5% last week.

The big emerging market (EM) economy is estimated to have expanded a hefty 9.5% in 2021 despite the market volatility in recent months, according to the World Bank’s latest Global Economic Prospects report.

But the bank forecast Turkey’s gross domestic product growth would slow sharply to 2.0% this year and 3.0% in 2023. In its previous report last June, it predicted growth of 5.0% in 2021, and 4.5% in both 2022 and 2023.

The $720-billion economy grew 0.9% in 2019 and 1.8% in 2020, weighed down by a recession sparked by a separate currency crisis and later by the coronavirus pandemic.