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USD/TRY Trades +1% Higher Following FinMin Replacement

TURKEY
  • USD/TRY trades +1.02%% higher on the back of FinMin Elvan’s overnight replacement with Nureddin Nebati as Erdogan continues to purge officials opposed to high interest rates.
  • This change does not come as a surprise to markets, with rumours of his resignation having circulated in recent weeks.
  • The replacement does, however, add more weight behind the low rates policy push. USD/TRY closed yesterday’s session -1.13% lower after the CBRT officially announced it was conducting FX intervention to offset unhealthy price formations in the cross.
  • This is the first intervention since 2018/19, and the first official CBRT announcement of intervention since 2014.
  • However, markets agree that it is expected to be broadly ineffective given the bank’s limited stock of reserves which doesn’t allow it to meaningfully impact the trajectory of the lira in the face of overwhelming easing pressures from Erdogan going into 2022.
  • It will be interesting to see if the CBRT makes 14.00 the level it defends and how vehemently it does so in the coming weeks as markets put pressure on TRY going into the next CBRT meeting with another cut expected.
  • Intraday Sup1: 13.1308, Sup2: 12.9204, Res1: 13.682, Res2: 13.9519
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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