- USD/TRY adds to recent gains near the 18.00 barrier.
- Turkey’s industrial production grew by 8.5% year-on-year in June.
- The CBRT sees inflation around 70% by the end of the year.
the turkish lira remains on the defensive in the second half of the week and raises the USD/TRY until about 18.00 on Friday.
USD/TRY rises on purchases on USD dips
USD/TRY advances for the second session in a row and holds near 18.00 for another session at the end of the week.
The pair’s rally on Friday is due to renewed dollar strength, as the recovery in the risk complex appears to be taking a breather after the persistent bounce of recent sessions.
In Turkey, industrial production surprised to the upside and expanded 8.5% in the year to June, while retail sales contracted 0.7% mom and expanded 5.5% in the last twelve months.
Also, the Turkish central bank (CBRT) released its year-end CPI forecast, now seeing consumer prices rising 70.60% by the end of 2022 (from 69.94%).
What to keep in mind around TRY
USD/TRY bullish bias remains unchanged and remains on course to revisit the key 18.00 zone.
Meanwhile, the lira is expected to continue oscillating around developments in energy and commodity prices – which are directly correlated to the events of the war in Ukraine – general trends in appetite for risk and the path of the Fed rates in the coming months.
Additional risks facing the Turkish currency also come from within, as inflation shows no signs of abating (despite rising less than expected in July), real interest rates remain entrenched in negatives and political pressure for the CBRT to go for low interest rates remains pervasive. In addition, there does not seem to be a plan B to attract foreign exchange in a context in which the country’s foreign exchange reserves are decreasing day by day.
Technical levels
So far the pair is gaining 0.12% at 17.9556 and faces the immediate target of 17.9874 (3rd Aug high) seconded by 18.2582 (20th Dec all-time high) and then 19.00 (round level). On the other hand, a break of 17.1903 (weekly low Jul 15) would pave the way towards 16.2788 (100-day SMA) and eventually 16.0365 (monthly low Jun 27).
Source: Fx Street
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