Carry Trade Investors Return to Turkish Lira Amid Optimism Over Iran Peace

Billions in Capital Return to Turkey's Money Market According to exclusive reports from BloombergHT on June 23, 2026, Turkey's financial market is witnessing a new wave of foreign liquidity. Carry trade investors, who had closed their positions due to recent Middle East tensions and oil price volatility, have now returned to the Lira market with force. According to informed sources, the volume of carry trade positions has reached approximately $30 billion in the currency market and $15 billion in the bond market [1]. In the past week alone, more than $6 billion in fresh capital has entered this cycle, indicating a significant shift in international investors' risk appetite. ## Impact of Iran-US Agreement on Lira Stability The primary driver of this unexpected return is optimism regarding the de-escalation of geopolitical tensions between Iran and the United States. Following a brief 12-day military conflict, the reaching of a memorandum of understanding for a ceasefire and the potential lifting of some Iranian oil sanctions have led to a decrease in global oil prices [2]. Since Turkey is a major energy importer, lower oil prices have reduced inflationary pressures in the country and increased the Lira's attractiveness for investors seeking to profit from interest rate differentials. Analysts believe that stability in relations between Tehran and Washington could drastically reduce the risk premium on Turkish assets [1]. ## Central Bank Monetary Policy and 40% Interest Rates The Central Bank of the Republic of Turkey (TCMB) continues to follow strict contractionary policies. Currently, the Central Bank injects liquidity into domestic banks at a 40% interest rate, which is significantly higher than the projected inflation rate for the end of 2026 (approximately 26%) [1]. This positive interest rate gap has made Turkey one of the most profitable destinations for carry trade strategies. Furthermore, the Turkish government's extension of tax exemptions on government bonds until the end of 2026 has created additional incentive for institutional investors to maintain their assets in Lira [3]. ## Summer Outlook and Domestic Risk Management Onur Ilgen, Head of Treasury at MUFG Bank Turkey, emphasized in an interview with Bloomberg that if no new geopolitical tensions occur, risk appetite for the Lira is expected to remain high throughout the summer months [1]. However, the market still keeps an eye on Turkey's domestic developments, including recent political challenges following the removal of the opposition leader, which initially caused some concern. But currently, high yields from interest rates and positive signals of regional peace have overcome domestic political risks, making the Lira the star of emerging markets in June 2026 [2].