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TURKISH LIRA: USD/TRY resumes its upward trend, with the TRY the poorest
performing currency in EMFX so far Monday (RUB is strongest). While USD/TRY is
higher, the rate remains below both Friday and Thursday's highs at 5.9706/5.9801
respectively and a break above here will usher in further multi-month highs as
markets trade at levels not seen since early October last year. TRY markets are,
however, far more orderly than they were a few weeks ago, with realised vol
falling sharply and feeding into implied measures. Risk reversals contracts look
somewhat favourable also, with the one-month measure retreating to 7.5 points
Monday, well below the 9.00 printed in mid-April.
-Of note, this morning Goldman Sachs forecast USD/TRY rallying a further 15% in
the coming 12 months (targeting 6.50 in six months and 7.00 in 12 months' time).
Goldmans cite the Turkish central bank's move away from attempting to restore
confidence in the TRY as well as the 'dollarisation' of the Turkish financial
-Turkey has a busy economic calendar this week, culminating in CPI for April due
Friday. The Y/Y rate is expected to rise to 20.3%.