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TRY Diverges EM FX Strength as USD Slides

TURKEY
  • USD/TRY trades +0.36% higher this morning, diverging the broader EM FX rally against a softer greenback.
  • TRY and the broader EM space held up extremely well against tensions in Ukraine with USD/TRY closing -0.16% lower on the day.
  • The CBRT had very little impact on price action with a hold on policy the unanimous consensus.
  • Focus remained on lira stability as the primary directive, while the drivers of inflation were changed from FX distortions to “pricing formations that are not supported by economic fundamentals.”
  • The CBRT remains in wait and see mode for the foreseeable future, but Erdogan’s recent comments reminded markets that he remains in favour of lower rates going into elections than higher – using non-standard policy tweaks to deliver TRY stability instead.
  • Real rates remain deeply negative at -35%, which should continue to support the self-fulfilling cycle of inflation and currency depreciation over the medium-term.
  • USD/TRY remains within its lateral range with an eye on 13.6795 resistance for a breakout higher towards 13.9542.
  • Intraday Sup1: 13.5823, Sup2: 13.5489, Res1: 13.6344, Res2: 13.6782
MNI London Bureau | +44 020-3983-7894 | murray.nichol@marketnews.com
BulletEM BulletEmerging Market NewsHomepage
MNI London Bureau | +44 020-3983-7894 | murray.nichol@marketnews.com
BulletEM BulletEmerging Market NewsHomepage

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