USD/TRY: Turkish lira drops as CBRT removes pledge to tighten policy
|A few moments ago we published an article on the Indian Rupee HERE, in which I mentioned that emerging market currencies could come under further pressure. Lo and behold, the Turkish lira has just dropped +1% on the back of the latest announcement by the Turkish Central Bank. The CBRT has removed a key line from its statement that pledged further tightening will be delivered. Instead, the central bank merely pledged to maintain a tight policy. So, it hasn’t completely ruled out rate hikes, but the omission of the key statement has done the damage for now and the TRY has fallen sharply.
According to the CBRT: “Developments in domestic demand conditions have led to some improvement in inflation indicators. Yet, higher food and import prices and the elevated course of inflation expectations point to continued risks to price stability. Accordingly, the Committee has decided to maintain the tight monetary policy stance until inflation outlook displays a significant improvement.”
Our followers should not be surprised by the latest weakness in Lira. We highlighted last week that the USD/TRY could pop higher this week, in THIS article. The fact that rates have now pushed higher, the path of least resistance clearly remains to the upside and more pain could be on the way for Turkish citizens unfortunately.
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Source: TradingView and FOREX.com.
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