The Turkish lira has stabilized after a tumultuous period, but the economy still faces significant challenges. Despite a 10% increase this year and a 60% surge in the past 12 months, the USD/TRY exchange rate remains stuck at 32.30.

Turkey's economy struggles with high inflation and budget deficits, resulting in a trade deficit of TRY 177 billion ($5.5 billion). Inflation continues to soar, with the Consumer Price Index (CPI) reaching 68.80% in April, up from 38.2% in June last year.

Analysts expect inflation to moderate in the second half of the year, but the Central Bank of the Republic of Turkey (CBRT) has revised its inflation expectation upwards, predicting a peak of 75-76% in May before a decline.

A rate cut is expected later this year, but the Turkish lira faces challenges due to the wide spread between interest rates and inflation. The Federal Reserve's hawkish stance due to persistent inflation may also impact the Turkish lira's recovery.

Technically, the USD/TRY exchange rate is stuck between key support and resistance levels, with a break above 32.81 indicating upside potential and a move below 31.75 signaling further downside. The Turkish lira's long-term outlook remains bearish due to Erdogan's policies and the lack of CBRT independence.