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Turkey Roasted By Risk-Off - Focus Shifts to CBRT

TURKEY
  • USD/TRY opens lower after a brutal sell-off in yesterday's session as rising UST yields continue to hurt high-yielders.
  • USD/TRY was the clear underperformer with reduced TRY carry buffers making the cross more vulnerable to dollar strength, making it an easy target amid risk off.
  • Price action topped out around 7.7835 in yesterday's session in a +11.78% move since 22 Feb – undoing a great deal of good de-dollarisation work done by the CBRT's tightening drive and adding pressure to hike further in the coming meetings.
  • Next week's meeting will be pivotal in reasserting a downward trend in USD/TRY, with such a substantial unwind in USD/TRY owing to UST yields unlikely to have been priced into the CBRT's value function, reducing positive FX passthrough to inflation dramatically.
  • At these higher levels, TRY is undoubtedly becoming more attractive, however, so long as the rising treasury yield & above-average volatility narrative remains in place, EM high-yielders will remain on the backfoot.
  • Above 7.80 we start running into some more serious resistance and may see some fading interest on hiking expectations being priced into next week's CBRT.
  • Intraday Sup1: 7.6844, Sup2: 7.5788, Res1: 7.7930, Res2: 7.8951
MNI London Bureau | +44 020-3983-7894 | murray.nichol@marketnews.com
BulletEM BulletEmerging Market News
MNI London Bureau | +44 020-3983-7894 | murray.nichol@marketnews.com
BulletEM BulletEmerging Market News

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