USD/TRY: Turkish Pres. Erdogan propels biggest rally in 31 months
- 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.
Moving on, American traders’ reaction to the move will be closely watched while many Fed policymakers are lining for speeches and could add volatility into the USD/TRY pair.
Technical analysis
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.
Author
Anil Panchal
FXStreet
Anil Panchal has nearly 15 years of experience in tracking financial markets. With a keen interest in macroeconomics, Anil aptly tracks global news/updates and stays well-informed about the global financial moves and their implications.
