USD/TRY drops below 8.70 as Turkish central bank hikes FX reserve requirements

USD/TRY rebounds but not out of the woods yet.
The lira jumps after CBRT hikes FX reserve requirements.
The pair awaits the US ISM PMI and NFP data for fresh impetus.

Dhwani Mehta FXStreet

USD/TRY is consolidating a swift recovery from daily lows of 8.6565, helped by the relentless buying interest seen around the US dollar across the board.

Flaring up Delta covid strain concerns and Fed’s hawkish monetary policy stance is supporting the ongoing strength in the greenback, as the US dollar index flirts with three-month tops of 92.54.

However, the lira bulls continue to fight for control for the second straight day this Thursday. The lira witnessed a wild ride earlier in the European session before tumbling to daily lows, in response to the measures announced by the Turkish central bank (CBRT), in a bid to bolster lira holdings in the banking system.

The CBRT said that it would hike required reserve ratios on foreign currency deposits. “The required reserves revisions would lead to an increase of Turkish lira and forex-denominated required reserves by 13.2 billion lira ($1.52 billion) and $2.7 billion, respectively,” the bank said.

The pair now awaits the US ISM Manufacturing PMI data for fresh trading impetus while Friday’s NFP release will emerge as the main determinant of the dollar’s price direction in the near term.

USD/TRY technical levels

The upward-sloping 21-Daily Moving Average (DMA) at 8.6351 continues to guard the downside. Any sustained move below the latter could trigger a sharp sell-off towards the bullish 50-DMA at 8.7480. Alternatively, acceptance above the horizontal trendline resistance at 8.80 could expose the 9.00 threshold, marking fresh record highs.

Author

Dhwani Mehta

FXStreet

Residing in Mumbai (India), Dhwani is a Senior Analyst and Manager of the Asian session at FXStreet. She has over 10 years of experience in analyzing and covering the global financial markets, with specialization in Forex and commodities markets.

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