Interest in Turkey are 8.25% p.a and in Germany interest rates are currently offered at a negative 0.5% p.a. The euro currently trades at EUR/TRY 8.73.

Given the current spot rate of EUR/USD 1.18 and an annualized forward premium of 0.85% p.a for the EUR against the USD, generate a forecast of the value of the USD in terms of TRY for 2 year's time. What equilibrium relationship do you use to generate the forecast? Show all the steps involved.