USD/TRY: A rational slap takes the Lira to record lows beyond 23.00

• USD/TRY marks all-time highs above 23.00.
• Türkiye lenders seem to have stopped their support for the Lira.
• Domestic and foreign investors remain skeptical so far.

The Turkish currency is still in free fall, which motivates the USD/TRY to push to new all-time highs above the 23.0000 barrier on Wednesday.

USD/TRY looks for clues in the government

USD/TRY keeps the bullish bias well entrenched on Wednesday as investors continue to assess President Erdogan’s recent victory in the May 28 election and the subsequent appointment of Finance Minister M. Simsek as somewhat market-friendly.

Meanwhile, the lira’s plunge on Wednesday appears to be attributed to state lenders halting their sale of dollars to support the currency, signaling a change in approach by the new economic administration. This shift suggests a move away from costly interventions and toward more conventional economic policies.

So far, the Turkish currency has already depreciated by around 24% since the start of the new year, while the fall has reached almost 170% since the Turkish central bank (CBTR) began its easing cycle in August 2021. .

What to keep in mind about the TRY

USD/TRY maintains its bullish bias well entrenched, always underpinned by the relentless plunge in the Turkish currency.

Meanwhile, investors are expected to watch upcoming monetary policy decisions closely, especially after President RT Erdogan appointed former Economy Minister M. Simsek as the new finance minister following a cabinet reshuffle following of the second round of the general elections on May 28.

Simsek’s appointment has been greeted with optimism by market insiders, though it remains unclear whether his orthodox stance on monetary policy will be able to survive amid Erdogan’s penchant for fighting inflation through lower interest rates.

In a more macro scenario, it is assumed that the price action around the Turkish Lira will continue to revolve around the evolution of energy and raw material prices, which are directly correlated with the evolution of the war in Ukraine. , broad risk appetite trends and dollar dynamics.

technical levels

So far, the pair is gaining 7.49% at 23.0676 and faces the next hurdle at 23.1582 (June 7 all-time high) followed by 24.00 (round level). To the downside, a break below 19.6547 (55-day SMA) would expose 19.2926 (100-day SMA) and finally 18.9152 (200-day SMA).