USD/TRY climbs to multi-session highs past 17.00

Further depreciation of the Turkish currency lends extra wings to USD/TRY and motivates it to break above the 17.00 yardstick on Tuesday.

USD/TRY now targets the 2022 highs near 17.40

USD/TRY extends the advance for the fourth consecutive session on Tuesday amidst the solid performance of the greenback, the pick-up of the risk aversion and recession chatter.

Indeed, the greenback saw its upside momentum gather extra steam in response to rising speculation of a global recession, which has been recently intensified after final Services PMIs in the euro area dropped further in June.

In addition, Monday’s higher-than-expected inflation figures in Türkiye also weigh on the sentiment around the lira and prompted the pair to almost fully recover the ground lost following the ban on Turkish lira loans to some companies by the banking watchdog (BDDK) on Friday 24.

What to look for around TRY

USD/TRY looks to consolidate the sharp rebound from 16.00 neighbourhood, as investors continue to digest the latest announcement by the Turkish banking watchdog (BDDK) on June 27.

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-dolarization 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 remain omnipresent.

Key events in Türkiye this week: Inflation Rate, Producer Prices (Monday) – Current Account (Friday).

Eminent issues on the back boiler: FX intervention by the CBRT. Progress (or lack of it) of the government’s new scheme oriented to support the lira via protected time deposits. Constant government pressure on the CBRT vs. bank’s credibility/independence. Bouts of geopolitical concerns. Structural reforms. Presidential/Parliamentary elections in June 23.

USD/TRY key levels

So far, the pair is gaining 1.40% at 17.0208 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 15.3361 (100-day SMA).