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USD/TRY Makes An Attempt at 11.00 as CBRT Looms

TURKEY
  • USD/TRY trades +1.05% higher this morning, having made an early attempt at the 11.00 handle this morning.
  • We are definitely in currency crisis territory folks, with the cross having depreciated ~30% since the start of August. The focus will now move to what measures the CBRT can put in place to stem the bleeding and how comfortable it is with weakness beyond 11.00.
  • This meeting today will be vital in determining how much further the weakness runs, with a cut greater than 100bp following yesterday's remarks from Erdogan likely to add more fuel to the TRY depreciation fire.
  • Dollaristaion has accelerated notably and FX passthrough to inflation should see CPI prints rise into 2022 – crimping the CBRT's ability to reduce rates further and driving real yields deeper into negative territory in a vicious snowballing effect.
  • Focus will be on the 11.00 handle for the next leg higher, alternatively a smaller than expected cut or a hold may see a sharp reversal (although this isn't our base case).
  • Intraday Sup1: 10.5619, Sup2: 10.446, sup3: 10.3541, Res1: 10.9680, Res2: 11.07, Res3: 11.21
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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