EUR to TRY Forecast

History of the EUR to TRY pair

The euro to Turkish lira is a relatively popular cross-currency pair, thanks to the close relationship between the European Union and Turkey. Both countries play an important role in the global economy since they are members of the North Atlantic Treaty Organisation (NATO).

Turkey’s geographical location also plays a crucial role in the economy because one part of the country is in the Middle East while the rest is in continental Europe. As such, Turkey always had strong economic and social ties with European countries.

The EUR to TRY cross-currency pair was created when the European Union shifted to the Euro. Before that, trade between Turkey and European countries used to happen with their local currencies. Spain had Peseta while Germany, Italy, and France had Deutsche Mark, Italian lira, and French franc, respectively.

The overall trend of the EUR/TRY since its foundation has been upward as the Turkish lira has continued losing its value against most currencies.

The collapse of the Turkish lira had a significant impact during this time. For example, in 2008, 1 Euro was equivalent to 1.4 Turkish liras. Today, 1 Euro is equal to 20 liras.

Latest EUR to TRY forecast

To come up with a good EUR/TRY forecast, we need to understand why the Turkish lira has collapsed. The main reason is that unlike in other countries, Turkey does not have an independent central bank. As such, the president indirectly influences the actions of the bank. He does that by appointing people who believe in perpetual low-interest rates and firing those who raise interest rates.

As a result, the CBRT decided to slash interest rates from 14% to 9% in 2022, even as inflation in the country jumped. The obvious way to fight inflation is usually to hike interest rates in a bid to lower spending.

In 2022, inflation peaked at over 85%. Therefore, the divergence between the actions of the ECB and the CBRT widened, pushing the Turkish lira sharply lower.

CBRT and ECB decisions

There will be several catalysts for the EUR to TRY pair in the coming months. The most important one will be the actions of the CBRT and ECB. In February, the ECB decided to hike rates by 0.50%, bringing the main rate to 3.25%. It also hinted that it will continue increasing rates in the coming months since inflation ought to be rising.

On the other hand, the CBRT has not slashed rates since 2022. Instead, the bank has observed several initiatives to stabilize the Turkish lira. For example, it has entered several currency swaps with countries like Saudi Arabia and the United Arab Emirates. It has also started a liraization strategy that encourages people and companies to hold the lira.

Turkish election

The other factor that will influence the Turkish lira is the election scheduled for May 2023. This election will put Recep Erdogan against Kemal Kilicdaroglu, the opposition coalition candidate. With his flawed response to the large earthquakes, some political watchers believe that he could lose his first election in decades.

If this happens, it would help boost the Turkish lira by bringing in changes to the CBRT. For example, the opposition could work to make the CBRT more independent, which could help boost the lira.

However, before the election, we could see the EUR/TRY pair continue rising because of the overall uncertainty about the next leader.

EUR/TRY technical analysis

The EUR to TRY exchange rate has been in a spectacular bullish trend in the past few years. However, it recently saw an upward trend as Turkish inflation starts to drop by about 3.25% from its highest point this year due to the earthquake.

A closer look shows that the EUR/TRY price has formed a rising wedge pattern that is shown in blue. In price action analysis, this pattern is usually a sign of a bearish breakout.

Therefore, if this happens, the next key level to watch will be the support at 18.06, which is ~10% below the current level.

Transferring EUR to TRY

The volume of flows between the European Union and Turkey is enormous. Data by the European Union shows that Turkey is the sixth biggest trading partner of the bloc. At the same time, the EU is the biggest Turkish trade partner.

In total, the two-way trade volume between Turkey and the European Union is over 132 billion euros. Imports from Turkey are worth 62 billion euros while exports are about 70 billion euros.

At the same time, there are millions of Turkish citizens living in the European Union (EU). These people tend to send billions of euros back home which is done in various ways such as bank transfer via money transfer services like Wise, WorldRemit, PaySend, and XE; and by using traditional money transfer companies like MoneyGram and Western Union.

Is it a good time to buy EUR with TRY?

For long-term purposes, it makes sense to buy EUR with TRY since the overall trend of the currency pair is bullish. However, with an election coming up, and due to the rising wedge pattern, it is recommended to wait and see. You can still exchange your Turkish lira for Euros but with caution.

EUR to TRY 6 month forecast next 6 months – analysis

The most important catalyst for the EUR/TRY in the next six months is the election that is going to take place in May 2023. It will be crucial because it would help in determining whether Turkey will have a status quo or there will be changes to the economy.

If Erdogan wins, it means that the current unconventional monetary policy will continue and push the pair high. On the other hand, if the opposition wins, it will push the Turkish lira higher.

In the next six months, as per the chart analysis above, it cannot be ruled out where the pair drops by about 10%. That’s because the rising and falling wedges are some of the most reliable patterns in technical analysis.

A bit more about EUR to TRY

Will the EUR to TRY Rise or Fall in the Next Six Months?

The EUR/TRY pair has been in a bullish trend for many years. With an election coming up in May, there is a likelihood that the pair will have a bearish breakout in the next six months. If this happens, it could fall by about 10% in the coming months.

Why has the EUR to TRY pair jumped for years?

The main reason is that the CBRT has been slashing interest rates in a period when inflation has been rising. Since Q4’21, the CBRT has slashed interest rates from 20% to about 9%. In monetary policy, central banks tend to raise interest rates in periods of high inflation.

In line with this, the Turkish lira has crashed because of the lack of the central bank's independence since the president can hire and fire a governor without any due process. In other countries, the president appoints officials who are then confirmed by parliament.

CBRT rate cuts

Is it Easy to Convert EUR to TRY?

It is relatively easy to convert EUR to TRY. You can exchange the two currencies at a forex bureau in your country or at the airport. Another way is to use modern companies like Wise and Paysend that make it possible to exchange currencies. Finally, you can also use your bank to exchange the currencies.