USD/TRY extends further the breakout of the 17.00 level
Another day, another drop in the Turkish lira, and this time lifting USD/TRY further north of the recently broken 17.00 yardstick. USD/TRY advances for the sixth session in a row so far, gaining already 8% since the lows near the 16.00 neighborhood on June 27 in response to the Turkish banking watchdog (BDDK) announcement of a ban on lira loans to certain companies with strong FX positions. In the meantime, the strong upside momentum in the greenback continues to heavily weigh on the risk complex and the EM FX universe, putting TRY under extra selling pressure.
USD/TRY keeps heading north – and the lira continues to give away gains - after bottoming out in the 16.00 zone in late June, as investors appear to have already digested the latest announcement by the BDDK. So far, the lira’s price action is expected to keep gyrating around the performance of energy prices, the broad risk appetite trends, the Fed’s rate path, and the developments from the war in Ukraine.
In addition, the effects of this new measure aimed at supporting the de-dollarization of the economy will also have its say, at least in the very short term. Extra risks facing the Turkish currency also come from the domestic backyard, as inflation gives no signs of abating, real interest rates remain entrenched in negative figures, and the political pressure to keep the CBRT biased towards low-interest rates remains omnipresent. So far, the pair is gaining 0.32% at 17.2441 and faces the immediate target at 17.3759 (2022 high June 23) seconded by 18.2582 (all-time high December 20) and then 19.00 (round level). On the other hand, a breach of 16.0365 (monthly low June 27) would pave the way for a test of 15.6684 (low May 23) and finally 15.4281 (100-day SMA).
In addition, the effects of this new measure aimed at supporting the de-dollarization of the economy will also have its say, at least in the very short term. Extra risks facing the Turkish currency also come from the domestic backyard, as inflation gives no signs of abating, real interest rates remain entrenched in negative figures, and the political pressure to keep the CBRT biased towards low-interest rates remains omnipresent. So far, the pair is gaining 0.32% at 17.2441 and faces the immediate target at 17.3759 (2022 high June 23) seconded by 18.2582 (all-time high December 20) and then 19.00 (round level). On the other hand, a breach of 16.0365 (monthly low June 27) would pave the way for a test of 15.6684 (low May 23) and finally 15.4281 (100-day SMA).