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USD/TRY Forecast: USD/TRY Record High, Volatility Rising on Policy Easing Risks

USD/TRY Forecast: USD/TRY Record High, Volatility Rising on Policy Easing Risks

Justin McQueen,
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USD/TRY, CBRT Price Analysis & News

  • USD/TRY Hits as Fresh Record High
  • Softer Than Expected Inflation Leaves Room for Possible Easing

The Turkish Lira is once again garnering interest, although, it is not entirely that difficult to gather one’s attention amid the far from exciting G10 FX at present. Back to the Lira, which had hit a fresh record low after Turkish President Erdogan said he had spoken with the central bank governor, stating that interest rates need to be lowered. The President had also set a timeline of July/August for interest rates to start coming down.

That said, while the Turkish Central Bank Governor had been quick to comment that investor concerns over premature policy easing should be ignored. Today’s softer than expected inflation figures will likely fuel concerns of policy easing, with the central bank given more room to lower interest rates. Keep in mind, the Governor had previously stated that the policy rate will remain above the inflation rate.

Turkish Intrest Rates vs Inflation Rate

Source: Refinitiv

Taking a look at the chart, the path of least resistance is higher USD/TRY with volatility likely to pick up heading into both the July and August meetings. Naturally above the swing high of 8.7775, the focus will be on the psychological 9.000 handle.

USD/TRY Chart: Daily Time Frame

Source: Refinitiv

As a side note, volatility in the Turkish Lira is important for equity traders, namely those who have exposure to Spanish Banks and the IBEX 35, which we have highlighted previously.

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.