- USD / TRY maintains gains around the 8.1500 level on Tuesday.
- Weekly support so far emerged just below 8.1000.
- Inflation in Turkey rose again in March.
The Turkish lira loses part of Monday’s gains and pushes the USD/TRY to the 8.15 / 16 area, where it encountered some resistance on Tuesday.
USD/TRY atento al CBRT
USD / TRY reverses the marked retracement recorded on Monday, although so far it manages well to stay within the weekly range.
The lira picked up some interest earlier in the week after inflation figures in Turkey showed that the CPI rose for the sixth month in a row in March, this time by 16.19% from a year earlier. In a monthly view, consumer prices rose 1.08%.
In the very short term, the lira is expected to keep trading within the unchanged range at least until the Turkish central bank (CBRT) meets on April 15. On the latter, and in the context of growing nervousness among investors, CBRT Governor S. Kavcioglu said that he will not reverse N. Agbal’s policies immediately, adding that he plans to meet the central bank’s inflation target. by 5.0%.
So far, the Turkish currency has depreciated around 13% since President Erdogan’s decision to replace the CBRT governor in late March.
What to look for around TRY
The short-term outlook for the lira remains fragile, to say the least. Despite claiming 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. of 2020. Kavcioglu 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 bets on a rapidly rising balance of payments crisis and a flight of foreign exchange reserves. In this context, it will not surprise anyone to see TRY around 10.00 in the next few months.
Technical levels
Right now, the pair is up 0.45% to 8.1350 and faces 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 7.4974 (200-day SMA) and then 7.1856 (March 19 monthly low).
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