The CBRT rate decision due at................>

TURKEY: The CBRT rate decision due at 1200BST/0700ET comes as the USD/TRY rate

holds close to multi-year highs printed yesterday at 6.9970. The CBRT are seen

cutting rates by 50bps to 9.25%, the lowest since 2018 as authorities look to

juice credit markets to contain the economic fallout from Coronavirus. Estimates

are wide-ranging, however, with some seeing a 100bps today and a handful also

going for unchanged.

- How this leaves the TRY remains to be seen, with evidence mounting that the

country's FX reserves are falling sharply as a result of state bank currency

intervention to slow the TRY's decline. Moves this morning to boost limits on

local bank swap lines, however, could help CBRT build (or slow the decline of)

FX reserves. Additionally, lower commodity prices could help alleviate any

upward pressure on inflation, giving the CBRT more room to trim rates.

- The longer-term target for USD/TRY sits at the alltime high of 7.2362 printed

in August 2018. Mirroring the sell-off in TRY spot are implied vol metrics, with

option skew the most in favour of TRY downside protection on a one-month basis

since the Lira crisis almost two years ago.