TRY remains slightly stronger..........>

TURKISH LIRA: TRY remains slightly stronger against most others Tuesday, but the

pair is yet to erase the entirety of Friday's sharp gains and still sits just

north of the 5.50 mark. While spot markets have been quieter Tuesday, that's not

the case for options and hedging markets, with the USD/TRY forward curve still

steepening and sitting at the highest levels of 2019. The USD/TRY overnight

forward implied yield continues to blow out, rising to just shy of 350%,

heightening hedging costs and helping stymie spot volatility and the TRY

downside argument today.

- Similarly, overnight vols in USD/TRY saw sharp, erratic price action ahead of

the close Monday (resulting in an apparently un-erroneous print of 145.9 vol

points, easily an all time high) and they remain acutely elevated today. Market

sources report much of the problem is stemming from funding issues and the moves

come despite Reuters reporting that Turkish banks in London had started keeping

USD/TRY swaps markets trades well below the 25% regulatory limit, showing the

market remains inconsistent and patchy at best.