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USD/TRY Dives Back Below 11.00, But TRY Weakness Expected to be a Recurring Theme

TURKEY
  • USD/TRY trades -1.51% lower this morning, feeling some relief after days of sustained upside pressure.
  • The cross rose +4.43% in yesterday's session for a total of +11.28% since Monday in the sharpest depreciation during Erdogan's tenure.
  • As expected, the CBRT cut interest rates by 100bp to 15.00%, with potential for another cut in December alluded to in the statement. Justifications for the cut remained the same with the MPC citing 'transitory' supply-side shocks and a newly noted positive effect on credit markets – continuing to steer away from the clearly inflationary fundamental market conditions.
  • Guidance remained the same on limited space to cut further, but said a rate cut would be "assessed" at the next meeting – leading to GS and a number of sell-side institutions adding expectations for another 50-100bp cut.
  • USD/TRY popped higher after the decision, topping out at 11.3118 before falling back below the 11.00 handle today.
  • USD/TRY is likely to remain choppy today, but markets are still likely to favour fading try strength with the expectation of another December cut.
  • The trajectory remains concerning for TRY, especially with rumours circulating about FinMin Elvan's potential resignation.
  • Intraday Sup1: 10.7815, Sup2: 10.6364, Res1: 11.1567, Res2: 11.3118
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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