USD/TRY is kept in a suspiciously narrow daily range around 6.85 though today the pair had a trip to 6.90. Economists at Rabobank expect dollar/lira to be capped by the habitual suspects.
Key quotes
“Turkey’s inflation accelerated further to 12.6% y/y in June after rising sharply to 11.4% y/y in May from 10.94% in April. The breakdown revealed a broad-based increase in core goods prices. This can be attributed to rising cost-push inflationary pressure driven by the costs of dealing with the Covid19 and a weaker lira.”
“The central bank remains confident that inflation will start decelerating again in the second half of the year due to ‘demand-driven disinflationary effects.’ We are not entirely convinced given that banks are providing substantial amount of credit to the economy which may inevitably fuel demand-led pressure.”
“USD/TRY seems to be artificially kept in a very narrow daily range by the usual local suspects, who try to prevent it from regaining a strong upside momentum on the back of growing concerns about high inflation, negative interest rates and a sharp widening of the current account deficit to USD -12.8 billion in January-April, up from just USD -0.9 billion last year.”
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