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USD/TRY Sits Out USD Weakness as CPI Surges to 48.69% y/y

TURKEY
  • USD/TRY trades +0.18% higher this morning, holding onto its near-term uptrend that has held since the start of the week.
  • The cross sat out yesterday’s bout of USD weakness as negative real yields widened following CPI, as broadly expected.
  • Although this is a notable print, the policy stance from the CBRT is unlikely to change at this juncture as Erdogan continues to favour tweaks to the FX-linked deposit scheme over rate hikes in 1H22.
  • Policy will become more challenging in the months ahead if inflation fails to moderate in line with Erdogan and FinMin Nebati’s forecasts and Lira weakness returns.
  • The latest bout of FX-linked deposit tweaks come with embedded fiscal risks, should the lira resume its prior weakening trend.
  • In the meanwhile, markets will likely continue to fade TRY strength, with an eye on 14.00 resistance for a breakout higher in the medium-term.
  • NFP data will be in focus today with markets seeing scope for a softer print following Wednesday’s ADP number.
  • Intraday Sup1: 13.5489, Sup2: 13.5087, Res1: 13.6344, Res2: 13.682
MNI London Bureau | +44 020-3983-7894 | murray.nichol@marketnews.com
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MNI London Bureau | +44 020-3983-7894 | murray.nichol@marketnews.com
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