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- USD/TRY trades flat to higher around the open, having drifted higher post-CBRT in line with broad-based risk off in EM FX.
- Turkish markets saw little reaction to the CBRT meeting, which came out in line with expectations save for a marginal hawkish tilt vs the prior statement.
- The mention of "decisively" maintaining the current tight policy was the only notable change to the forward-looking part of the statement, while promises of maintaining above-inflation rates were reiterated.
- Going forward, markets will look to the next CPI print for signs of premature easing in line with Erdogan's comments (July-August), with further downside surprises likely to embolden the president to press for lower rates.
- Sell-side expectations see CPI lifting to the 17% range and remaining sticky into end-3Q or early 4Q21, leaving little room to ease without destabilizing the lira.
- Sell-side also increasingly concerned about Aggressive TRY depreciation from rising US Treasury yields, with a number seeing the 8.80-9.00 region in USD/TRY coming into play in the near-term.
- Intraday Sup1: 8.6399, Sup2: 8.5808, Res1: 8.7488, Res2: 8.8008