USD / TRY falls to 4-week lows around 8.5500

• USD / TRY extends the decline to the 8.5500 region.
• High inflation remains a concern among rate setters.
• The CBRT left the policy rate unchanged on Wednesday.

The Turkish lira appreciates even more against the dollar and drags the USD/TRY to fresh multi-week lows in the 8.5500 region on Thursday.

USD / TRY weaker after CBRT

USD / TRY is on the defensive for another session and is navigating the levels last seen in mid-June near 8.5000.

The lira has reaffirmed its bullish momentum after the Turkish central bank (CBRT) coincided with market expectations and left the one-week repurchase rate unchanged at 19.00% on Wednesday.

In the statement, the CBRT sticks to the recent aggressive message and reiterates that the policy rate will remain above inflation. It is worth mentioning that it was the fourth meeting in a row in which the CBRT refrained from acting on the rates.

As for the latter, high inflation and inflation expectations are expected to remain at the center of debate among economists in the coming months, as additional upward pressure on consumer prices could come from unusually producer prices. high energy costs and the gradual reopening of the economy.

Earlier in the week, Turkey’s unemployment rate fell to 13.2% in May, industrial production expanded to 40.7% annualized in the same period, and retail sales contracted 6.1% month-on-month, also during May.

Technical levels

So far, the pair is shedding 0.24% at 8.5635 and a drop below 8.5511 (July 15 weekly low) would target 8.2803 (June 11 monthly low) and finally 8.2374 (100-day SMA). On the upside, the next barrier is at 8.7974 (all-time high on June 25) before 9.0000 (round level).