Next big move in lira exchange rate may be just around the corner ragardless rate cut – Commerzbank
|The Turkish central bank cut rates on Thursday by 1% despite recording an almost 70% inflation rate. The lira exchange rate sold off immediately after the announcement but did not proceed to weaken by much, instead re-gaining some ground soon. Economists at Commerzbank still believe that the next big move in the TRY may be just around the corner.
Turkey defies the unanimous consensus expectation
“Turkey's central bank (CBT) surprised the market by cutting interest rates again – on this occasion by 100 bps from 14% to 13% – even while inflation has accelerated to 80% and inflation expectations have accelerated to 70% (they have fully un-anchored).”
“There was hardly any surprise at the fundamental level. So, the 'surprise' was only relative to some simple double-guessing by the financial market, without reference to deeper fundamentals, that CBT would ‘stay put’ on the day.”
“Our view remains unchanged that the next big move in the lira exchange rate may be just around the corner. Whether yesterday's rate decision will end up playing some role in that or not remains to be seen.”
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.