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USD/TRY Hovers Above 8.60 as Markets Eye Potentially Hawkish CBRT Meeting

TURKEY
  • USD/TRY trades mostly flat around the open, having pared yesterday's move below 8.60 following a hotter than expected US CPI print that bolstered the USD into the back end of the session.
  • Focus today is on the CBRT, where the one-week repo is expected to remain at 19.00%.
  • Key focus of the meeting will be on tone and any changes in hawkish phraseology as renewed overshooting pressures in CPI reduce scope for premature easing and raise the bar higher for Kavcioglu in terms of assuring markets that he will deliver market appropriate policy, should inflation deteriorate further.
  • Sell-side institutions have reduced dovish estimates for 2021 cuts, but bolstered year-end inflation targets with some seeing a peak in inflation around 18-19% and the first cuts starting in October.
  • For today, a more cautious tone on rising inflation or any signals towards more tightening (although unlikely) should bolster TRY in the near-term.
  • However, unfavourable current account dynamics and the erosion of real yields through rising CPI are likely to continue weighing on TRY over the medium to longer-term.
  • Intraday Sup1: 8.5808, Sup2: 8.5409, Res1: 8.6738, Res2: 8.6927
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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