USD/TRY retreats on much-needed intervention after Lira plummets past 4.925
- Turkish Lira halts free-fall as central bank steps in to halt decline.
- Turkish president Erdogan is threatening to take greater control of monetary policy post-election.
The Turkish Lira has bounced from central bank intervention after a scorching run down the charts, and the USD/TRY is back into 4.5685.
The Lira tumbled 5.7% on Wednesday in the lead-up to intervention by the Turkish central bank, and the USD/TRY pair peaked at an all-time high of 4.9262 before the central bank boosted late cash rates by 300 basis points on Wednesday, sending the pair back beneath the 4.5700 level.
The Turkish Lira has been hammered by double-digit inflation, and the Lira has been systematically grinding lower, though political instability and a lack of confidence in Turkey's President Recep Erdogan has ramped up the sell-off in recent months. The Turkish Lira, hampered by a country riddled with political strife and failed coup attempts, is rapidly approaching the 5.0000 level against the US Dollar, after starting out almost on par with the Greenback at 1.1493 in April of 2008.
USD/TRY levels to watch
The central bank's indirect intervention in the TRY has knocked the inflation-fueled currency back for now, but following President Erdogan's stated intent of taking firmer control of monetary policy after he wins the next election, further weakness could challenge Turkey's control over its currency. As FXStreet's own Pablo Piovano noted just before the central bank's intervention, "on the flip side, the next support is located at 4.4920 (10-day sma) followed by 4.3227 (21-day sma) and then 4.2197 (low May 10)."
Author
Joshua Gibson
FXStreet
Joshua joins the FXStreet team as an Economics and Finance double major from Vancouver Island University with twelve years' experience as an independent trader focusing on technical analysis.
