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USD/TRY Hovers Above 12.00 as Rumours of CBRT FX Intervention Emerge

TURKEY
  • USD/TRY trades +1.09% higher this morning, continuing to trade on its own with idiosyncratic factors driving price action.
  • The cross fell -5.18% yesterday, following investment deals with the UAE and some reports of the CBRT selling small amounts of USD.
  • Sentiment still remains extremely fragile in TRY and should continue to trade wildly in the coming days.
  • News from discussions with the banking regulator and commercial banks this afternoon will be eagerly awaited for signs of direction from the CBRT, which has thus far been relatively non-committal on any action other than light threats of FX intervention in bouts of excessive volatility.
  • Markets are now anticipating that the CBRT will need to hike rates to rectify the policy missteps, but achieving this against political pressure from Erdogan may push the CBRT closer towards more unconventional monetary policy tools – providing a short-term patch for TRY volatility but not addressing the root cause of the problem.
  • On the international front, the Fed minutes confirmed MPC members were eyeing a faster taper and potentially earlier rates lift-off than before – adding support to the strong USD environment.
  • Intraday Sup1: 11.8667, Sup2: 11.5871, Res1: 12.4788, Res2: 12.6855
MNI London Bureau | +44 020-3983-7894 | murray.nichol@marketnews.com
MNI London Bureau | +44 020-3983-7894 | murray.nichol@marketnews.com

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