- USD / TRY found support at 8.00 so far this week.
- The lira gained about 5% on Monday following the CBRT news.
- All attention is once again on the CBRT and possible rate hikes.
The Turkish lira cut part of Monday’s gains and motivates the USD/TRY to resume the upside to the 8.40 region on Tuesday, where some initial resistance appears to have emerged.
USD / TRY now look at CBRT
The lira posted the biggest daily advance against the dollar since summer 2018 on Monday after market participants (initially) perceived as positive news that President RT Erdogan fired Governor M. Uysal on Saturday, replacing him with N. Agbal. In addition, former Finance Minister and Erdogas’ son-in-law, B.Albayrak, resigned due to health problems on Sunday.
Governor N. Agbal is known for his strong opposition to Uysal’s tightening policies and foreign exchange interventions to defend the national currency.
Now Agbal is expected to be under the microscope of investors amid the urgent need for structural reforms in the country, as well as at least a 500 basis point hike in interest rates. The latter could be announced at the bank’s meeting on November 19, although the bets for an emergency rate hike earlier continue to rise.
Meanwhile, the lira has depreciated over 30% (considering Friday’s all-time lows) and remains by far the worst performing EM currency. In light of recent events, Turkey’s 5-year Credit Default Swaps (CDS) fell back to levels last seen in late October around 514.
Technical levels
At the moment, the pair is gaining 2.40% at 8.2350 and faces the next hurdle at 8.5777 (all-time high on Nov. 6). On the downside, a dip below 7.9876 (Nov 9 low) would expose 7.7916 (55-day SMA) and finally 7.7787 (Oct 22 low).
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Credits: Forex Street
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