USD / TRY challenges monthly lows around 8.2700

• USD / TRY reverses the recent strength and falls to 8.2700.
• Inflation was below 10% by the end of 2022 and around 8% in 2023.
• Inflation figures for August rose above 19.0% YoY, 1.12% MoM.

The Turkish lira reversed recent weakness and appreciated to the 8.27 region against the dollar on Monday.

USD / TRY in 4 month lows

After two consecutive daily previews, the USD/TRY it has resumed the slide and is already testing multi-week lows in the 8.2700 region. Therefore, the spot has started the fifth week in a row with losses, pointing at the same time to the critical level of 8.0000, where the always relevant 200-day SMA also coincides.

The lira manages to regain significant upward traction after the government revealed the details of a three-year economic program. Accordingly, inflation is reduced to levels below 10% by the end of 2022 and falls further to the 8% area by the following year.

In addition, the economy is expected to expand by 9% in 2021 and around 5% next year, always supported by a faster vaccination campaign, a solid rebound in tourism figures and a good performance of exports.

It’s worth remembering that CPI-tracked inflation rose to an annualized 19.25% over the past month and 1.12% over the prior month. Producer Prices rose 2.77% month-on-month and 45.52% in the last twelve months.

Technical levels

So far, the pair is shedding 0.40% at 8.2778 and a drop below 8.2612 (September 2 monthly low) would target 8.1316 (April 29 low) and finally 8.0193 (200-day SMA). On the other hand, the next rising barrier lines up at 8.3463 (September 3 monthly high) followed by 8.4789 (100-day SMA) and then 8.5578 (August 20 high).