Citigroup: Believes that arbitrage trading in Turkish lira will become "more complex"

Economists at Citigroup believe that the Turkish lira will still be one of the core carry trade currencies in 2026, but the future trading path may be "more complex and challenging." Economists Erkler Domac and Kultegin Iskeral stated in a report released on Thursday that reasons behind this include "narrowing interest rate differentials and the highly one-sided exposure of domestic residents' portfolios to the Turkish lira." The two said, "The Turkish central bank has implemented multiple regulatory measures, and the current monetary policy framework relies on a variety of policy tools, which enhances the central bank's management capabilities of the local currency."