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USD/TRY Moves Back Above 14.00, Testing CBRT Resolve Ahead of Thursday's Meeting

TURKEY
  • USD/TRY trades +2.75% higher this morning, retracing some of yesterday’s intervention-induced move back towards 13.70 to trade back around 14.20.
  • Interestingly, CBRT USD sales sparked a more notable turnaround than in previous bouts, begging the question if the size of interventions was ramped up.
  • Nevertheless, it has proven broadly ineffective and only temporary – placing the bank in a more precarious reserve position the more reserves it burns.
  • With little data on the agenda today, the focus will be on pre-FOMC positioning as markets brace for potentially hawkish developments on doubled taper speed and a dot plot showing 2-3 hikes in 2022.
  • Beyond this, the CBRT is expected to deliver another -100bp cut on Thursday, with potential risks to a larger cut should Erdogan seek to accelerate his new low rates, high growth/exports policy model.
  • TRY assets should remain on the backfoot in this environment leading up to the meeting. Intraday Sup1: 13.952, Sup2: 13.6613, Res1: 13.4943, Res2: 13.759
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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