German Deutsche Bank's investment advice for Turkish lira: The best performing global currency.

Deutsche Bank has announced that Turkish lira-denominated bonds offer an extremely attractive entry point for investors.

RECOMMENDATION FROM GERMAN BANK FOR TURKISH LIRA

In a research note titled "Turkish fixed income: now or never" written by Deutsche Bank's Middle East and Eastern Europe Research Director Christian Wietoska, Economist Yiğit Onay, and Researcher Ankit Jain, it was noted that the Turkish lira has been the "best-performing global currency by a wide margin" since the interest rate hike in March.

"THIS IS JUST THE BEGINNING"

The note stated that short-term bonds have experienced a strong rally so far, and it is believed that this is just the beginning and that local bonds still offer extremely attractive entry levels.

"STABLE CURRENCY SUPPORTS DOWNWARD INFLATIONARY CYCLE"

The note also mentioned that after inflation in Turkey reached its peak at 75.5% in May, a strong disinflation is expected in the coming months, with annual inflation projected to decrease to 50% by the end of August and 40% by the end of the year. The note also highlighted that weakening domestic demand, tighter credit conditions due to interest rate hikes, and a more stable currency support a downward inflationary cycle.

The note stated that the real appreciation of the Turkish lira and the expected slowdown in domestic demand will contribute to the downward trend in inflation. It also mentioned that in August, a sharp decrease in headline inflation to around 50% could create a more favorable environment for anchoring inflation expectations for households and businesses.

"INVESTMENT CAN BE MADE IN TURKISH GOVERNMENT BONDS"

The research note recommended investing in Turkish government bonds, citing the expectation of low supply in domestic assets during the summer and the positioning still being at low levels, which would make bond yields more attractive with the improvement in inflation expectations.

Last week, Swiss asset management company Pictet Asset Management also announced that it has started buying long-term lira bonds due to the increasing investor support for Turkish bonds and the lira.