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TRY Plummets into Currency Crisis Territory as Locals Flee to Dollars

TURKEY
  • USD/TRY trades +0.91% higher this morning, resuming yesterday's push higher as the TRY sell-off snowballs into a currency crisis with the cross up +25.14% since the start of September.
  • The move higher accelerated sharply in yesterday's session with traders citing a notable uptick in dollarisation with locals buying USD in volume – exacerbating the recent bout of TRY weakness.
  • Interestingly, the CBRT has been somewhat more comfortable with TRY weakness this time around, but must be paying more attention after yesterday's 3% uptick.
  • Businesses are starting to really feel the impact of TRY weakness – begging the question of when the state banks might step in to curb the depreciation or if we get a return to the Albayrak-style unconventional policy tools to stabilize the currency.
  • Signs of progress on F-16 talks are a positive for US-Turkey relations, but the F-16 remains a poor choice for Turkey's military needs and is more of an olive branch deal than real military addition.
  • Markets should continue to heap pressure on TRY, continuing to fade bouts of strength. Focus shifts to the 10.50 handle, with a consolidated break opening a potential move towards 10.80-90, especially if the CBRT delivers a hike greater than 100bp.
  • Intraday Sup1: 10.3541, Sup2: 10.2837, Res1: 10.4610, Res2: 10.52
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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