USD / TRY rises to 3-day highs around 8.6000

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  • USD / TRY reverses some of the recent losses, around 8.60.
  • Turkey’s consumer confidence fell to 79.5 in July.
  • The markets in Turkey will be closed this week for holidays.

The Turkish lira gives up some of the recent gains and raises the USD/TRY to the region of 8.6000 at the beginning of the week.

USD / TRY rises on dollar gains, risk aversion

Persistent risk aversion provides additional support to the dollar to the detriment of riskier / high-yielding assets on Monday. The dollar movement encourages the pair to reverse six consecutive daily setbacks and bounce off lows at the key 8.50 zone (July 16).

The recent (unusual?) Lira strength appears to be supported by the Turkish central bank’s (CBRT) hitherto tight stance, which left the one-week repurchase rate unchanged at 19.00% for the fourth month in a row last week. The CBRT statement reiterated the bank’s commitment to combat the current high inflation and that the policy rate will be set above the inflation rate.

It is worth remembering that inflation in Turkey rose unexpectedly in June in the face of speculation that consumer prices may have peaked earlier in the year. Investors continue to point to the resumption of the relaxation cycle by the CBRT sometime towards the end of the current year.

On the national calendar, Turkey’s consumer confidence fell to 79.5 for the current month (from 81.7).

On another front, the Turkish stock market will be closed for the rest of the week due to the Eid-al-Adha holiday.

Key levels

So far, the pair is gaining 0.75% at 8.5706 and faces the next hurdle at 8.6733 (July 8 monthly high) followed by 8.7974 (June 25 all-time high) before 9.0000 (round level). On the downside, a drop below 8.4928 (July 16 monthly low) would target 8.2803 (June 11 monthly low) and finally 8.2613 (100-day SMA).

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