USD/TRY finally hits new all-time highs around 18.26

• USD/TRY breaks above 18.26 and trades at new all-time highs.
• The lira falls to a new record low against the US dollar near 18.30.
• The next event to highlight on the calendar will be the year-end CPI forecast.

The Turkish lira depreciates to new historical lows against the USD and raises the USD/TRY to new record highs beyond 18.26 on Wednesday.

USD/TRY is now heading for…20?

USD/TRY gives back some of the initial advance amid renewed dollar weakness and the more than likely presence of FX market intervention by Ankara.

The pair, meanwhile, is holding up the multi-week sideways mood above the 18.00 region nice and sound and against the backdrop of the complete absence of genuine buyers of the Turkish currency.

Meanwhile, the TRY is expected to remain under scrutiny ahead of the year-end CPI forecast release later in the week, ahead of the key interest rate decision by the Turkish central bank (CBRT) on September 22.

On the national docket this week, the unemployment rate fell to 10.1% in July, while industrial production increased 2.4% year-on-year in the same month and retail sales contracted 0.3% from the previous month. .

What to look for around the TRY

Finally, USD/TRY made up its mind and advanced to new all-time highs by breaking above the 18.26 level on Wednesday.

So far, price action around the Turkish lira is expected to continue to revolve around developments in energy and commodity prices – which are directly correlated to developments in the war in Ukraine – general trends in risk appetite and the trajectory of Fed rates in the coming months.

Additional risks facing the Turkish currency also come from within, as inflation shows no signs of abating (despite rising less than expected in July and August), real interest rates remain well entrenched in negative territory and political pressure for the CBRT to go for low interest rates remains pervasive.

In addition, there seems to be no immediate option to attract foreign exchange other than through tourism income, in a context in which the official figures of the country’s foreign exchange reserves continue to be surrounded by growing skepticism.

Technical levels

So far the pair is down 0.02% at 18.2409 and a break of 17.8590 (weekly low Aug 17) would target 17.7919 (55-day SMA) and eventually 17.7586 (monthly low Aug 9). On the upside, the next hurdle appears at 18.2623 (14th Sep all-time high), followed by 19.00 (round level).