- USD/TRY extends the leg lower to the 8.5500 region.
- High inflation remains a concern among rate-setters.
- The CBRT left the policy rate unchanged on Wednesday.
The Turkish lira appreciates further vs. the greenback and drags USD/TRY to fresh multi-week lows in the 8.5500 region on Thursday.
USD/TRY weaker post-CBRT
USD/TRY trades on the defensive for yet another session and navigates levels last seen in mid-June near 8.5000.
The lira sees its upside momentum re-affirmed after the Turkish central bank (CBRT) matched markets’ expectations and left unchanged the One-Week Repo Rate at 19.00% on Wednesday.
In the statement, the CBRT sticks to the recent hawkish message and reiterates that the policy rate will be kept above the inflation. It is worth mentioning that it was the fourth meeting in a row with the CBRT refraining from acting on rates.
On the latter, high inflation and inflation expectations are expected to remain in the centre of the debate among economists in the next months, as extra upside pressure on consumer prices could come from unusually high producer prices, energy costs and the gradual reopening of the economy.
Earlier in the week, Turkey’s jobless rate eased to 13.2% in May, Industrial Production expanded at an annualized 40.7% in the same period and Retail Sales contracted 6.1% inter-month, also during May.
USD/TRY key levels
So far, the pair is losing 0.24% at 8.5635 and a drop below 8.5511 (weekly low Jul.15) would aim 8.2803 (monthly low Jun.11) and finally 8.2374 (100-day SMA). On the upside, the next up barrier comes in at 8.7974 (all-time high Jun.25) ahead of 9.0000 (round level).
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