USD/TRY - Dear Turkish financial minister: If at first you don't succeed, then don't TRY or TRY again

  • USD/TRY is currently trading at 6.6881 and down from the opening high that stretched all the way up to 6.9496 from a close of 6.3835 after Friday's dramatic end to the week where the TRY was down 27% on the rout in Turkish financial markets and the political fallout with Washington.
  • Recent high is at 6.9496. Friday's close was 6.3835 (to close the gap) and Friday's open was 5.5518. 

The Turkish financial minister trying to ease the market's concern failed at the open this week, hence the subsequent sell-off in the nation's currency. The TRY was in supply in the open on Monday early Asia, despite the Turkish financial minister saying that steps will be taken on Monday morning to 'TRY' and ease the market's concerns - Reuters reported in commentary from the Hurriyet newspaper - one of the major Turkish newspapers noting that they are not contemplating seizing or converting dollar-denominated accounts to Liras,  which would be "out of the question". 

Further key points, (Reuters):

  • Authorities will take necessary measures with Turkish banks and banking watchdog gives no details.
  • Says seizing or converting dollar-denominated accounts to Liras out of the question.
  • Says Turkey has drafted an action plan for the real economy sector, which is the most impacted by forex fluctuations.
  • Says will offer support via fiscal policies to strengthen the independence of monetary policy.

However, the various tweets and soundbites from the Communications Director for the Turkish Presidency are doing little to negate the elephant in the room which are indeed the domestic economic policies that are turning worse for the nation that lead to the Turkish Lira's fall of now about 20% since last Friday's open - and indeed, Turkey contagion risks are elevated. 

  • Black Swan Friday (that we should have seen coming) as it happened - Turkey risk and the tide of US dollar funding

Analysts at  ANZ Bank New Zealand Limited (ANZ) explained Friday's price action:

"There was a strong risk-off move in global markets as President Erdogan’s speech failed to calm nerves and President Trump pledged to double the steel and aluminium tariffs against the country. The USD strengthened across the board, treasury yields fell, stocks were sold, and commodities were mixed. The Turkish lira fell 15% on Friday, bringing year to date declines to 42% in a country with considerable foreign-denominated debt."

USD/TRY levels

Recent high is at 6.9496. Friday's close was 6.3835 (to close the gap) and Friday's open was 5.5518. 

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