- USD/TRY fades pullback from November 2020 top, keeps longest rally since August 2018.
- Turkey’s President Recep Tayyip Erdogan sacked the Central Bank of the Republic of Turkey (CBRT)Governor Naci Abgal late on Friday.
- Risk-off mood adds strength to the upside momentum, US session reaction, Fedspeak eyed.
USD/TRY consolidates the heaviest jump since November 2018 while easing to 8.10 during early Monday. Even so, the pair keeps Turkish President Recep Tayyip Erdoğan-led rally while flashing over 12% intraday gains by the press time.
During late-Friday, Erdoğan fired CBRT Governor Abgal after CBRT announced a higher than expected rate hike of 200 basis points (bps), to 19% interest rate, during a routine monetary policy announcement. Mr. Erdogan has been strict in ousting policymakers and had take decisions in the past.
Following the latest decision, Reuters said, “The appointment of Sahap Kavcioglu, a former banker and ruling party lawmaker, in the early hours on Saturday marked the third time since mid-2019 that Erdogan has abruptly fired a central bank chief.”
Although Kavcioglu is considered sharing the likes of Erdogan, the job of CBRT Governor is through one and hence challenges over the USD/TRY looms despite the latest pullback.
Other than the domestic catalysts, risk-off mood, mainly taking clues from the coronavirus (COVID-19) resurgence and reflation fears, favor the US dollar strength and suggest further strength of the USD/TRY prices.
Although November top surrounding 8.5815 guards USD/TRY pair’s immediate upside, a downward sloping trend line from November 24, 2020, near 7.9390, restricts the bears’ entry.
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