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TRY Resumes Its Slide, Moving Below Parity With ZAR as CPI Risks Escalate

TURKEY
  • USD/TRY trades +2.58% higher this morning, breaking above 16.00 and moving below parity with ZAR after a monumental 115%+ YTD depreciation vs the USD in 2021.
  • Interestingly the CBRT has yet to wade in with USD sales to defend the lira since the cross broke above 14.50 since Wednesday but this will need to be monitored going ahead.
  • Gross reserves have fallen $5.5bn in three weeks, making future interventions less effective and increasingly difficult to justify. Yesterday, the CBRT signalled an end to its cut cycle – saying the limited room for easing had been completely used up.
  • This provided little solace to the lira which continued to bleed post-meeting. While this is a slight relief, markets are now bracing for the inflation storm in the coming months, which will push real yields deeper into negative territory.
  • Sell-side analysts also anticipate that the 50% minimum wage boost could add as much as 6-8% to inflation – setting the CPI peak at around 40% y/y in 1H22.
  • Intraday Sup1: 15.6583, Sup2: 15.2853, Res1: 16.50, 16.75
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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