USD/TRY jumps to fresh highs near 3.83 on CBRT decision

The Turkish Lira is sharply lower vs. the greenback on Tuesday, with USD/TRY advancing to fresh tops in the 3.83 neighbourhood.

USD/TRY higher post-CBRT

TRY met increasing selling pressure after the Turkish central bank kept the One-Week Repo Rate and the Overnight Borrowing Rate unchanged at 8.00% and 7.25%, respectively, while it hiked the Overnight Lending Rate to 9.25% from 8.50% at today’s meeting.

The decision came as a surprise for the global markets, as further tightening was expected in light of the recent pick up in inflation figures and TRY historical lows vs. the buck near 3.9500 (January 11).

TRY stays under pressure nonetheless, as the Turkish Parliament has approved on Sunday a new draft constitution, which could allow the country to instate a presidential system of government in the near future. The bill will become law if the referendum (likely in April) approves it with more than 50% of the votes.

The potential approval of these reforms has already sparked fresh political jitters in the country as it could boos the power of current President R.T.Erdogan.

USD/TRY key levels

At the moment the pair is up 0.89% at 3.7903 facing the next hurdle at 3.8286 (spike post-CBRT Jan.24) followed by 3.8430 (high Jan.19) and finally 3.9423 (all-time high Jan.11). On the other hand, a breakdown of 3.7363 (low Jan.24) would aim for 3.7161 (low Jan.13) and then 3.6944 (20-day sma).