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USD / TRY weaker, defies 2-month lows below 7.70 level

  • USD / TRY extends the breakout of the previous day below the key level of 8.00.
  • Lira gains remain underpinned by impending action from CBRT.
  • The market consensus foresees a big rise in interest rates next week.

The Turkish lira stands firm and drags the USD / TRY near 2-month lows, around 7.67 region Thursday.

USD / TRY now turns attention to CBRT

The continuation of the firm tone in the Turkish currency seems to confirm the change of opinion among investors, particularly after the events of last weekend, including the replacement of the CBRT governor and the resignation of the Minister of Finance, B. Albayrak, and the news on Wednesday that the banking regulator (BDDK) now allow access to more lira financing from foreign lenders.

Investor stance on the lira has now shifted to a bullish outlook with rising expectations of a rise in interest rates at the CBRT meeting November 19. The consensus among market participants predicts that the central bank increase the one-week buyback rate by at least 500 basis points to restore some credibility in the CBRT, in the lira and, ultimately, in the country.

Furthermore, the upbeat momentum in TRY has been further supported after the president Erdogan said on Wednesday that the country is expected to embark on long-awaited structural reforms. and very necessary in the short term. On this, Erdogan announced that Turkey will hold meetings with international investors.

Key USD / TRY levels

At the time of writing, the USD / TRY pair is shedding 1.05% on the day, trading at 7.7012. A dip below 7.5082 (September 25 low), would expose 7.4576 (100-day SMA) and 7.3049 (August 21 low). On the other hand, the next resistance is at 8.5777 (all-time high on November 6)

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Credits: Forex Street

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