USD/TRY to test the key 7.40 technical pivot if CBRT delivers a proper rate hike – Rabobank


On November 19 Turkey’s central bank will hold its most important interest rate meeting so far this year. It will be the first proper test for the newly appointed Governor Agbal. Expectations are very high and the CBRT cannot afford to disappoint the market. The CBRT should simplify monetary policy and raise the 1-week repo rate, according to economists at Rabobank. If delivered, the USD/TRY should break below the 7.40 mark. 

Key quotes

“With inflation on track to end this year above 12%, a proper rate hike is required to bring real interest rates to positive territory to restore the CBRT’s credibility. We, therefore, anticipate the 1-week repo rate to be raised by 500bps to 15.25%. The setup of monetary policy should be also simplified to strengthen the message that the central bank is firmly in favour of an orthodox policy. The central bank should explicitly say that funding will be provided at the 1-week repo rate.”

“Based on our 500bps call we expect USD/TRY to break below 7.40, which is an important technical pivot. A cluster of technical levels at 7.26/23 would be our next short-term target.” 

“While we do see scope for USD/TRY to fall well below 7.00 on the 12-month horizon, it is important to take it step by step starting with the monetary policy meeting on November 19. Every decision that the CBRT makes will be critical.”

“If the market ends up disappointed with a relatively small rate hike at the upcoming meeting, the benefit of the doubt that the market has given Governor Agbal will evaporate very quickly not only preventing USD/TRY from retracing further but potentially reigniting the upside pressure.” 

 

Share: Feed news

Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.

If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.

FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.

The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.

Recommended content


Recommended content

Editors’ Picks

EUR/USD consolidates weekly gains above 1.1150

EUR/USD consolidates weekly gains above 1.1150

EUR/USD moves up and down in a narrow channel slightly above 1.1150 on Friday. In the absence of high-tier macroeconomic data releases, comments from central bank officials and the risk mood could drive the pair's action heading into the weekend.

EUR/USD News
GBP/USD stabilizes near 1.3300, looks to post strong weekly gains

GBP/USD stabilizes near 1.3300, looks to post strong weekly gains

GBP/USD trades modestly higher on the day near 1.3300, supported by the upbeat UK Retail Sales data for August. The pair remains on track to end the week, which featured Fed and BoE policy decisions, with strong gains. 

GBP/USD News
Gold extends rally to new record-high above $2,610

Gold extends rally to new record-high above $2,610

Gold (XAU/USD) preserves its bullish momentum and trades at a new all-time high above $2,610 on Friday. Heightened expectations that global central banks will follow the Fed in easing policy and slashing rates lift XAU/USD.

Gold News
Week ahead – SNB to cut again, RBA to stand pat, PCE inflation also on tap

Week ahead – SNB to cut again, RBA to stand pat, PCE inflation also on tap

SNB is expected to ease for third time; might cut by 50bps. RBA to hold rates but could turn less hawkish as CPI falls. After inaugural Fed cut, attention turns to PCE inflation.

Read more
Bank of Japan set to keep rates on hold after July’s hike shocked markets

Bank of Japan set to keep rates on hold after July’s hike shocked markets

The Bank of Japan is expected to keep its short-term interest rate target between 0.15% and 0.25% on Friday, following the conclusion of its two-day monetary policy review. The decision is set to be announced during the early Asian session. 

Read more
Moneta Markets review 2024: All you need to know

Moneta Markets review 2024: All you need to know

VERIFIED In this review, the FXStreet team provides an independent and thorough analysis based on direct testing and real experiences with Moneta Markets – an excellent broker for novice to intermediate forex traders who want to broaden their knowledge base.

Read More

Forex MAJORS

Cryptocurrencies

Signatures