- USD / TRY rises further to near 8.3500.
- Turkey plans to ease the lockdown restrictions in the coming weeks.
- Investor attention remains on Thursday’s CBRT meeting.
Turkish currency depreciates to new multi-day lows against the dollar and raises the USD/TRY to new highs around 8.3500.
USD / TRY targets 8.4000 in the short term
USD / TRY leaves behind the daily retracement recorded earlier in the week as sellers regain control of sentiment around the Turkish lira and the dollar regains the upper hand in global markets.
In fact, stronger demand for the dollar, despite falling yields, puts pressure on the exchange rate space in emerging markets, always on the back of growing optimism about the US economic recovery.
On the domestic front, the latest news cites that the country could begin to ease some restrictions once the ongoing 17-day lockdown, which began on April 29, ends. In fact, both daily coronavirus cases and hospitalizations are experiencing a sharp decline from previous days, opening the door to a gradual resumption of activities in the wake of the current lockdown.
Meanwhile, caution among market participants is expected to gradually dominate the scene around the lira as markets approach the Turkish central bank (CBRT) event later in the week.
What to look for around TRY
The short-term outlook for the lira remains fragile, to say the least. Despite keeping rates unchanged at the last meeting, Governor S. Kavcioglu is expected to gradually reverse (phase out) the shift to a market-friendly approach to monetary policy that was successfully implemented by former Governor N. Agbal in November 2020. It will come as no surprise to see that the CBRT reverts to the unorthodox / looser monetary stance in the coming months, opening the door to further depreciation of the lira, exodus of foreign exchange reserves and rising foreign exchange rates. bets on a balance of payments crisis. In this context, it will not surprise anyone to see TRY around 10.00 in the medium to long term.
Key levels
At the moment, the pair is up 0.83% at 8.3159 and faces the next bullish barrier at 8.3464 (weekly high on May 4) followed by 8.4840 (high on April 26) and then 8.5777 (all-time high on November 6). 2020). On the other hand, a drop below 8.1316 (April 29 weekly low) would target 7.9937 (April 15 weekly low) and then 7.8837 (50-day SMA).
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