In November, Turkey’s trade balance showed a deficit of $8 billion, which was higher than the expected $7.8 billion. This situation could affect Turkey’s economic recovery as it continues to deal with problems related to external demand and high domestic inflation. Exports in November were about $15 billion, while imports reached around $23 billion. The growing trade deficit points to ongoing inflation and the challenges created by a weakening Turkish lira, making imports more expensive.

Impact On Turkey’s Economy

These trade numbers may create challenges for Turkey’s economy since trade deficits often relate to larger current account deficits. This might put more pressure on the lira and could require action from economic policymakers. As Turkey navigates these issues, people will be paying close attention to how the Central Bank or government responds to stabilize the economy and address the trade imbalance. The trade balance results from November highlight the ongoing struggles in Turkey’s economy and the need to closely watch external trade factors. The November trade deficit of $8 billion signals renewed stress on the Turkish Lira. This result is worse than the expected $7.8 billion, raising concerns about Turkey’s ongoing current account problems. For us, this reinforces the existing economic challenges as we approach the new year. Adding to this backdrop is stubbornly high inflation, which was reported at 68% year-over-year in December 2025. Despite the Central Bank’s policy rate remaining at 50%, these trade figures suggest that traditional strategies are failing to reduce import demand. This imbalance leaves the Lira especially vulnerable to negative sentiments.

Future Economic Outlook

In the coming weeks, we should consider strategies that could benefit from a weaker Lira against the dollar and euro. This might include looking at USD/TRY call options, expecting the Lira to rise above the current 40.00 level. However, we must keep in mind that implied volatility is already high, making these positions expensive to take on. The main risk to this outlook is a stronger policy response from the Central Bank of the Republic of Turkey. We will closely monitor their January 2026 meeting for any signs of an unexpected rate hike or new measures to stabilize the currency. Such actions could lead to a sharp, albeit possibly temporary, reversal in the Lira’s decline. Reflecting on our perspective at the end of 2025, we remember the significant policy changes that occurred after the 2023 elections. That period demonstrated how quickly authorities can shift strategies, resulting in major currency fluctuations. This historical volatility means we need to stay flexible and avoid becoming too committed to one direction. The upcoming release of December’s full trade data and January’s inflation report will be crucial. These figures will help us understand if this negative trend is gaining momentum. A significant improvement in these numbers will be necessary for us to reconsider our bearish outlook on the Lira. Create your live VT Markets account and start trading now.

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