Bank of America (BofA), one of the leading banks in the United States, has listed four conditions for taking a long position in the Turkish Lira (TL) or purchasing local government bonds with a 10-year maturity:
Increase in Central Bank Policy Rate: The first condition is for the Central Bank’s policy rate to be raised to 40% or higher. The current rate stands at 8.5%.
Exceeding 25 in USD/TL Exchange Rate: BofA’s second condition is for the USD/TL exchange rate to exceed 25.
End of Indirect Interventions and Restrictions on Dollar Purchases: The third condition is for the discontinuation of indirect interventions in the foreign exchange market and the removal of restrictions on companies’ dollar purchases. In recent years, the economic administration has imposed significant restrictions on dollar purchases and made it more difficult for companies with foreign currency surplus to obtain cheap credit.
Absence of Upward Global Outlook for the Dollar: BofA’s fourth condition is for the global outlook for the dollar not to be upward.
In the note published by BofA strategists, it was stated, “If expectations continue to be optimistic and if the proposed policies are expected to be consistent with orthodoxy, we believe that there is still an area to be addressed in the long term.”