With the prevailing view that dollar strength and lira weakness will continue against the Turkish lira/yen, the Turkish central bank's inflation report due on the 12th will be the focus.
Last week, dollar/yen rose at one point to the upper ¥158 range, while the lira weakened against the dollar as it moved above the key 50.00 level. On the 5th, the lira weakened and the yen strengthened following a sharp drop in US equities, sending the pair back down to around ¥3.130. On the 6th, lira selling and yen buying led the market, but downside was limited even as stocks fell, and the pair recovered to around ¥3.150.
This week's focus is the inflation outlook, with the central bank scheduled to publish its quarterly inflation report on the 12th. In its previous report in August, it raised its year-end inflation forecast to 28%, while leaving its provisional targets for the end of this year and next year unchanged at 24% and 15%, respectively. October inflation was high at 29.77% year on year, making it difficult to achieve the targets.
This week's focus will be the inflation forecast for the end of next year and the setting of the provisional target. The market expects annual inflation in 2027 to be around 24%. If the central bank's forecast falls significantly below the market forecast, this could signal a loss of confidence.