Turkey’s statistics office is set to publish March CPI and PPI figures on Good Friday. Market forecasts point to a small easing in headline CPI year-on-year and a rise in core inflation.
The article says year-on-year readings are less useful because higher energy prices are expected to affect inflation in the coming months, with a lag due to forward contracts. It states this makes the March data less relevant for assessing what comes next.
Market Focus Shifts From Backward Data
Istanbul’s CPI is reported at 37.7% year-on-year in March, down from 37.9% in February. It also rose 3% month-on-month.
For the national data, the article expects a similar pattern, with about a 2.5% month-on-month increase. It adds that media reports have pointed to rising costs for essentials such as bread and transport.
It says foreign exchange markets may treat energy-driven inflation as temporary, while the lira continues a steady longer-term weakening trend. Near-term market reactions are linked to how the geopolitical situation develops in the coming weeks.
The latest March 2026 inflation figures, which showed a slight moderation to 65% year-on-year, are largely irrelevant for forward-looking strategy. The sustained price of Brent crude, now trading above $95 a barrel, means a significant external price shock is still feeding into the economy. This makes backward-looking CPI data a poor guide for the Turkish Lira’s direction in the coming weeks.
Positioning For Managed Depreciation
We see that the orthodox policy turn that began in 2025 is being tested by this new inflationary wave, which is driven by external costs rather than domestic demand. The Central Bank of the Republic of Türkiye (CBRT) has paused its rate hikes, but the market is questioning if the current policy rate is high enough to counter these pressures. This situation creates a challenging environment where the Lira’s structural weaknesses are re-emerging.
For derivative traders, this outlook reinforces the case for positioning for a continued, managed depreciation of the Lira. Buying longer-dated USD/TRY call options is a straightforward way to gain exposure to this structural trend while managing the risk of short-term volatility. The key is to look past the monthly data noise and focus on the bigger picture of persistent inflation and external pressures.
Ultimately, geopolitical developments will likely serve as the primary catalyst for any sharp moves in the near term. We are closely watching tensions in the Black Sea and their impact on trade and risk sentiment. Any escalation would almost certainly accelerate the Lira’s decline, making volatility a key factor to trade around the core depreciation view.
