Analysts expect Turkish lira to fall 12 percent

The Turkish lira will fall 12 percent, reversing a 17 percent advance during 2007, according to analysts' forecasts reported by Bloomberg on Sunday.

Turkey will be one of the emerging countries in which the five-year currency rally will come to an end due to central bank's struggle to contain inflation Bloomberg said on Sunday citing DWS Investments and Morgan Stanley.



The Turkish lira will fall 12 percent, reversing a 17 percent advance, its biggest gain since at least 1972, during 2007 analysts forecasted.



Food and energy prices account for more than 40 percent of inflation in India, Thailand and Turkey, compared with about 25 percent in the U.S., according to Morgan Stanley. Inflation exceeds targets in at least 19 emerging economies.



"The shock of higher food and energy costs has exposed the major shortcomings of emerging economies in controlling inflation," Bloomberg quoted Stephen Jen, chief currency strategist at Morgan Stanley in London. "I'm not sure emerging markets will respond to inflation shocks."



According to the 26 developing-country currencies tracked by Bloomberg returned an average 0.96 percent in the past three months, down from 1.63 percent in the first quarter, 8.2 percent for all of 2007, and 30 percent annually since 2003.



Food and energy prices account for more than 40 percent of inflation in India, Thailand and Turkey, compared with about 25 percent in the U.S., according to Morgan Stanley. Inflation exceeds targets in at least 19 emerging economies.