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State Banks Do Not Intervene as USD/TRY Trades to Fresh Record High


Bloomberg report that state-run banks have not intervened to prop up the lira after the smaller-than-expected 650bp rate hike earlier today - after which USDTRY rallied to a fresh high. When the currency was last under pressure (Jun 07), state banks intervened after an intraday move of 6%. Such intervention has been a feature of price action in the last ~18 months with officials standing ready to prevent TRY weakness. USD/TRY trades 4.75% in the green at the time of typing while USD bond yields trade 11-18bps higher across the curve.

  • On the other hand, the Borsa Istanbul Stock exchange has rallied 4.65% as guidance that gradual policy tightening and scrapping of macroprudential measures raise optimism of Turkish companies in the longer run.
  • Finance and Treasury minister Mehmed Simsek posted on Twitter that he prefers a freely floating exchange rate. He said: “Policy framework based on the principles of market economy, free foreign exchange regime and open economy will ensure significant capital inflow to Turkey.”
  • Looking ahead, trade balance data (Est: -$12.6b) is on the docket tomorrow while a summary of the June MPC meeting will be released "within 5 working days".

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