Morgan Stanley has removed its "overweight" stance on Turkey's debt.

Morgan Stanley analysts, including Hande Kucuk and Arnav Gupta, have reduced their stance on Turkey's sovereign debt and removed their "buy" rating due to an increase in risk premium. They noted that the Central Bank's proactive measures to calm markets and maintain external buffers like gross reserves have helped resist shifting to a "sell" stance.

While recommending investors to "wait" before entering trades, the analysts emphasized the continuation of the asymmetric interest rate corridor as a buffer against heightened uncertainties. Morgan Stanley suggested that if currency pressures remain limited and inflationary pressures begin to ease, the Central Bank could resume interest rate cuts in June, forecasting year-end inflation at 29% and the policy rate at 33.5%. They also estimated that about $20 billion in offshore carry trade positions have been unwound, down from a predicted $36.5 billion prior to the recent easing.