USD/TRY meets support in the 16.50 region so far

Further gains in the Turkish currency now motivates USD/TRY to hover around the 16.60 region, down marginally for the day.

USD/TRY appears supported near 16.00

USD/TRY gives away part of Tuesday’s advance and seems to resume the downside despite the better mood surrounding the greenback on Wednesday.

Indeed, the lira looks bid as investors continue to closely follow the effects of Friday’s new government’s measure to boost the domestic currency. It is worth recalling that the Turkish bank regulator announced on Friday a ban on lira loans to companies holding more than TL15M if that amount surpasses 10% of the company’s total assets or annual sale revenues.

In the wake of the publication of this new interventionist measure, USD/TRY tumbled to the 16.00 area on Monday from Friday’s tops near 17.40, or nearly 8%.

In the calendar, Türkiye Economic Confidence Index dropped to 93.60 in June (from 96.70).

What to look for around TRY

USD/TRY keeps digesting the recent sharp decline following another intervention in the FX markets by Ankara.

So far, price action in the Turkish currency is expected to gyrate around the performance of energy prices, the broad risk appetite trends, the Fed’s rate path and the developments from the war in Ukraine, although the effects of this new measure aimed at supporting the de-dolarization of the economy will also have its say in the price action around spot.

Extra risks facing TRY 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: Economic Confidence (Wednesday) – Trade Balance (Thursday) – Manufacturing PMI (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. Upcoming Presidential/Parliamentary elections.

USD/TRY key levels

So far, the pair is losing 0.01% at 16.6373 and a breach of 16.0365 (monthly low June 27) would aim to 15.6684 (low May 23) and finally 15.2057 (100-day SMA). On the flip side, the next up barrier emerges at 17.3759 (2022 high June 23) seconded by 18.2582 (all-time high December 20) and then 19.00 (round level).