USD / TRY rises to multi-day highs near 8.7000

  • USD / TRY pushes higher and approaches the 8.70 area.
  • There were no surprises after the CBRT kept a steady hand on their meeting.
  • The better mood of the dollar also helps with the rise of the pair.

The Turkish lira depreciates further and now raises the USD/TRY to new multi-day highs around 8,670.

USD / TRY weaker on USD rally, CBRT inaction

USD / TRY has risen steadily since Monday, reversing last week’s decline almost completely to the 8.28 zone (June 11).

The lira started the week on the defensive and intensified the selling bias after the Biden-Erdogan meeting yielded no progress regarding Turkey’s purchase of the Russian S-400 missile defense system on Tuesday.

Today an additional weakness appeared in the currency following the decision of the Turkish central bank (CBRT) to leave the one-week repurchase rate unchanged at 19.00%. In the statement, the central bank reiterated that both inflation and inflation expectations remain high, while the level of the policy rate will be determined above inflation.

Additionally, the strong buying interest in the dollar in the wake of Wednesday’s FOMC event also gives additional wings to the pair’s weekly bullish move.

What to look for around TRY

The outlook for the Turkish lira continues to deteriorate almost daily, as rumors of interest rate cuts continue to run in the background and continue to be supported by the Erdogan administration. Although inflation appears to have peaked in April, it remains (very) high and a movement in rates on the short-term horizon appears to have lost some motivation for the time being. Meanwhile, political effervescence within the ruling AK Party, the impact of the pandemic on the economic outlook, high unemployment, and the complete absence so far of any intention to implement much-needed structural reforms continue to keep the lira low. persistent pressure.

Key levels

So far, the pair is gaining 1.03% at 8.6793 and is facing next resistance at 8.7472 (June 4 all-time high) before 9.0000 (round level). On the other hand, a drop below 8.3569 (50-day SMA) would point to 8.2803 (June 11 monthly low) and finally 8.2161 (May 7 low).

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