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USD/TRY advances to all-time highs around 21.5000

  • USD/TRY extends the rise to the 21.5000 zone.
  • At the moment, the Lira crisis does not seem to have a truce.
  • Inflation in Turkey fell below 40% year-on-year in May.

Further weakness in the Turkish currency leads to a new all-time high for the USD/TRYwhich this time reaches the 21.5000 area on Tuesday.

USD/TRY: Next target… the moon?

Meanwhile, USD/TRY continues to march north as investors continue to dump the lira following President Erdogan’s victory in Sunday’s general election and despite the appointment of well-known orthodox M. Simsek.

Recently, Minister Simsek underlined the crucial importance for Turkey of bringing inflation back to single digits in the medium term. In addition, he stressed the need to speed up the structural transformation process, which would help alleviate the current account deficit.

It should be remembered that on Monday the CPI rose 39.59% year-on-year in May and 0.04% compared to the previous month.

The lira has already lost more than 15% since the beginning of the year and almost 150% since the Turkish central bank (CBTR) began its easing cycle in August 2021.

What to keep in mind around 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 can 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

At the moment, the pair is gaining 1.27% at 21.4938 and faces the next hurdle at 21.5136 (June 5 all-time high) followed by 22.00 (round level). To the downside, a break below 19.5815 (55-day SMA) would expose 19.2495 (100-day SMA) and finally 18.8910 (200-day SMA).

Source: Fx Street

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