USD/TRY stays offered and recedes to the 8.00 area

The Turkish lira extends its renewed upside momentum and forces USD/TRY to recede to the 8.02 zone, where some decent support emerged so far.

USD/TRY now looks to the CBRT

USD/TRY fades Tuesday’s gains and resumes the downside as the Turkish currency manages to keep the buying bias well and sound for yet another session so far this week.

The sudden upside momentum in the lira comes after Erdogan replaced the Governor of the Turkish central bank (CBRT) on Saturday and Treasury and Finance Minister B.Albayrak stepped down on Sunday, all giving the impression that Turkey might finally embark on the much needed changes to restore credibility in both the country and the currency.

Wednesday’s better tone in the lira emerges after the banking regulator moved towards a normalization of market conditions. That said, foreign investors will now have access to lira funding via higher amount of currency swaps and derivative deals between local banks and its overseas counterparts.

In the meantime, all the looks are now upon next week’s CBRT meeting, where consensus sees an interest rate hike more likely. To be considered as serious and credible, such move by the CBRT should be of at least 500 bps.

USD/TRY key levels

At the moment the pair is losing 1.52% at 8.0337 and a drop below 7.9876 (low Nov.9) would expose 7.8020 (55-day SMA) and finally 7.7787 (low Oct.22). on the flip side, the next hurdle is located at 8.5777 (all-time high Nov.6).