- USD / TRY rises above 8,000.
- Decent support has emerged around 8.0000 so far.
- Investors remain very cautious ahead of the CBRT event.
The Turkish lira is trading with small losses and boosts the USD/TRY to stay in the tight trading range around the 8.1500 zone on Thursday.
USD / TRY centered on CBRT
USD / TRY is advancing for the third consecutive session so far on Thursday, extending the bounce from last Friday’s retracement to the 8.0000 area, which now stands as a fairly strong containment area.
Meanwhile, caution among market participants is expected to accelerate in the coming days before the Turkish central bank meeting on April 15.
There is no firm consensus regarding possible CBRT announcements, although bank officials reiterated that an interest rate cut is not guaranteed. Despite these comments, investors remain very vigilant about the possible shift to unorthodox policy measures, which remains the most likely scenario over time.
Nothing scheduled on the national agenda, while US Initial Claims increased by 744,000 from the previous week, disappointing expectations.
What to look for around TRY
The short-term outlook for the lira remains fragile, to say the least. Despite hinting to the contrary, the new CBRT Governor S. Kavcioglu is expected to gradually reverse (eliminate) the shift to a market-friendly approach to monetary policy that was successfully implemented by former Governor N. Agbal in November 2020. Kavcioglu’s appointment once again demonstrated who is rocking the monetary cradle in Turkey and will likely be the prelude to a return to unorthodox / looser monetary policy measures in combination with rapidly rising bets on a balance of payments crisis and a drain on foreign exchange reserves. In this context, it will not surprise anyone to see spot quotes around 10.00 in the coming months.
Right now, the pair is advancing 0.22% to 8.1540 and is facing the next bullish barrier at 8.4526 (March 30 high), seconded by 8.5777 (November 6, 2020 all-time high) and finally 9.0000 (round level). . On the other hand, a drop below 7.7772 (March 9 high) would target 7.5103 (200-day SMA) and then 7.1856 (March 19 monthly low).