USD/TRY tumbles to fresh lows near 7.50 post-CBRT

USD/TRY accelerates the downside to the 7.50 region.
The CBRT hiked the One-Week Repo Rate to 15%.
The lira climbs to 2-month tops vs. the US dollar.

Pablo Piovano FXStreet

The buying pressure around the Turkish lira accelerates on Thursday and drags USD/TRY to new 2-month lows in the 7.50 area.

USD/TRY weaker on CBRT decision

USD/TRY resumes the downside and breaks below a multi-session consolidative range after the Turkish central bank (CBRT) hiked the key One-Week Repo Rate by 475 bps to 15%, matching the broad consensus. According to the CBRT, the One-Week Repo Rate will now by the main policy tool, something that foreign investors were also requiring and that reinforces the return to a more orthodox monetary stance.

The CBRT also hiked the Overnight Borrowing Rate and the Overnight Lending Rate to 13.50% an 16.50%, respectively.

The central bank is expected to maintain tight monetary conditions until it sees a persistent drop in inflation, while it expects to reverse the continuous dollarization of the economy.

The move, despite largely anticipated (and long waited) by market participants, kind of confirms the new approach by the Erdogan’s administration and fuels further hopes of bigger changes in the country, particularly regarding structural reforms and a more market-friendly orientation.

USD/TRY key levels

At the moment the pair is down 1.57% at 7.5918 and a drop below 7.5059 (monthly low Nov.19) would expose 7.4988 (100-day SMA) and then 72019 (low Aug21). On the upside, the next hurdle is located at 7.7959 (weekly high Nov.17) followed by 7.8329 (55-day SMA) and finally 8.5777 (all-time high Nov.6).

Author

Pablo Piovano

FXStreet

Born and bred in Argentina, Pablo has been carrying on with his passion for FX markets and trading since his first college years.

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