Lira and CEE FX: Turkish Lira, Zloty, Forint — 2026-10-17
Turkey’s central bank signaled a strategic shift toward allowing the lira to depreciate faster to avoid future devaluation risks, while domestic markets brace for an expected 100-basis-point rate cut. Meanwhile, the Polish zloty and Hungarian forint strengthened against the dollar as global risk appetite improved, with NBP officials hinting at a potential return to profitability after record losses.
Lira and CEE FX: Turkish Lira, Zloty, Forint — 2026-10-17
Top developments
TCMB Governor Karahan Signals Faster Lira Depreciation Strategy
On October 14, 2026, Central Bank of Turkey (TCMB) Governor Fatih Karahan told investors in Bangkok that the bank is allowing the lira to slide more quickly to prevent sharper weakness in the longer term. This strategic pivot suggests a move away from defending specific exchange rate levels in favor of managing long-term stability. The statement comes as the lira continues to underperform, having lost 13.08% against the dollar since the start of the year, making it the worst-performing emerging market currency.
TCMB Reserves Hit $171.6 Billion as Gold Holdings Decline
TCMB total reserves rose by $4.2 billion in the week ending October 9, reaching $171.6 billion. While gross foreign exchange reserves increased, gold reserves decreased by $54 million. This reserve buildup provides a buffer against potential volatility following the Governor’s comments on exchange rate flexibility, though the decline in gold holdings reflects ongoing portfolio adjustments.
Market Expectations Shift Toward 100 Bps Rate Cut in October
Following September’s CPI data that fell below 30% year-on-year, Commerzbank analysts and domestic market participants now expect the TCMB to cut rates by 100 basis points at the upcoming October policy meeting. The TCMB’s October survey also reflected a consensus for a rate cut, with the year-end dollar/TL forecast settling at 51.55 TL. This easing cycle is seen as necessary to stimulate growth despite persistent inflationary pressures.
Polish Zloty Strengthens as Dollar Rally Breaks
The Polish zloty (PLN) gained ground against the dollar, euro, and pound on October 16, as the USD/PLN rate fell to approximately 3.88 PLN/USD. The zloty’s recovery was driven by a reversal in the dollar’s rally to multi-year highs and easing geopolitical tensions. NBP official rates for October 14 showed the dollar at 3.9042 PLN and the euro at 4.3706 PLN, reflecting a stabilization in the currency pair after earlier volatility.
NBP Member Hints at Return to Profitability After Record Losses
Ludwik Kotecki, a member of the Polish National Bank’s (NBP) Monetary Policy Council, stated that there is a chance for the NBP to achieve a profit in 2026. This follows a massive loss of 35.74 billion PLN in 2025, compared to 13.347 billion PLN in the previous year. The potential turnaround is linked to changing interest rate environments and valuation effects on foreign reserves, which could alleviate political pressure on the central bank’s autonomy.
Local view
Turkey: Local media outlets like Odatv highlight the lira’s continued erosion, noting that despite FX sales and high interest rates, the currency remains the worst performer among emerging markets this year. Bigpara and Investing.com focus heavily on the anticipated October rate cut, with the TCMB’s survey results showing a consensus for easing to support the economy.
Poland: Polish financial portal Bankier.pl reports that the initial market reaction to Fed signals was reversed, weakening the dollar and strengthening the zloty. Money.pl emphasizes the narrative around the NBP’s financial health, with policymakers actively managing expectations about a return to profitability to restore institutional credibility.
Hungary: Hungarian outlet Portfolio.hu notes that the forint strengthened against the dollar (HUF/USD moving from 326.5 to near 324) but remained mixed against the euro. The currency benefited from declining oil prices and news of the Strait of Hormuz reopening, which reduced geopolitical risk premiums.
Context & numbers
- EUR/TRY: Trading at approximately ₺55.29, up 0.49% recently, indicating continued pressure on the lira against the euro.
- TCMB Policy Rate: Held at 37% in the previous meeting, with the overnight lending rate at 40% and borrowing rate at 35.5%.
- NBP Reference Rates (Oct 14): USD/PLN 3.9042; EUR/PLN 4.3706; CHF/PLN 4.6835.
- ECB Reference Rates (Oct 13): EUR/HUF 364.31; EUR/PLN 4.3768; EUR/CZK 24.368.
- Turkish Inflation Expectations: Year-end CPI expectation raised to 29.63% in the latest TCMB survey.
On the radar
- TCMB October PPK Meeting: All eyes are on the upcoming Monetary Policy Committee (PPK) meeting where a 100 bps rate cut is widely expected. The decision will crucially impact the lira's trajectory given the Governor's recent comments on exchange rate flexibility.
- Fed Interest Rate Decision: The US Federal Reserve's October meeting is a key driver for global currency flows. Recent signals of potential rate hikes or holds were initially misinterpreted, causing dollar volatility that directly impacted PLN and HUF.
- Geopolitical Risk Premiums: The reopening of the Strait of Hormuz and falling oil prices have temporarily reduced risk premiums for CEE currencies like the forint. Any reversal in this geopolitical easing could quickly reverse the recent HUF and PLN gains.
This content was collected, curated, and summarized entirely by AI — including how and what to gather. It may contain inaccuracies. Crew does not guarantee the accuracy of any information presented here. Always verify facts on your own before acting on them. Crew assumes no legal liability for any consequences arising from reliance on this content.
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