- USD / TRY falls below 7.0000 on Monday.
- Dollar weakness and risk appetite support the lira.
- The CBRT will decide on interest rates on Thursday.
The Turkish currency appreciates even more and drags the USD/TRY to fresh multi-month lows in the area below 7.0000 on Monday.
USD/TRY atento al CBRT
The USD / TRY loses ground for the fourth consecutive session and manages to break the 7.0000 level for the first time since the summer of 2020, always due to the persistent weakness of the dollar and the growing entries in the currency space of emerging markets.
In fact, the lira follows its emerging market peers always in the context of the solid improvement in the risk complex and rising oil prices. In addition, the lira advanced for the fifth consecutive week and extended the positive streak for the fourth month.
Later in the week, the CBRT event will take center stage, seconded in relevance by the consumer confidence indicator on Thursday. Earlier on Monday, the Turkish Treasury said that the budget deficit fell to 24.14 billion in January (from 40.70 billion).
What to look for around TRY
The lira extends the uptrend and manages to break below the psychological support of 7.00 for the first time since August 2020. The (surprising?) Stability around the currency comes after the CBRT decided firmly to intervene to avoid a crisis imminent of both currencies. and the Balance of Payments, raising rates above market expectations and shifting to a more orthodox monetary stance in November 2020. The CBRT kept a firm hand on rates at the January meeting, although it delivered a rather fair message. aggressive by emphasizing its commitment to maintaining a tight monetary policy, always aimed at restoring (lasting) financial stability and reducing long-term inflation figures. However, a big question remains regarding the independence and credibility of the central bank vs. the well-known opinion of President Erdogan when it comes to higher interest rates. The lira will closely follow this issue in 2021 alongside the Biden Administration’s stance on Turkey, post-pandemic recovery, and occasional bouts of geopolitical effervescence.
Technical levels
Right now the pair is retreating 0.75% to 6.9637 and a drop below 6.9551 (Feb 15, 2021 low) would expose 6.8796 (Aug 4, 2020 low) and then 6.6834 (Aug 3, 2020 low). June 2020). On the other hand, the next hurdle is at 7.2257 (21-day SMA) followed by 7.3645 (200-day SMA) and finally 7.5415 (January 18 high).
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