USD/TRY Gains Modestly As CBRT Keeps 1-Week Repo Rate Steady

Summary:

The USD/TRY gained modestly in Thursday's session after the CBRT under the new leadership opted to hold the 1-week repo rate at 19.00%.

The Central Bank of the Republic of Turkey (CBRT) held interest rates at 19.00%, in the first meeting presided over by the new Governor Sahap Kavcioglu.

In the first policy statement by the bank after the firing of the hawkish Naci Agbal on March 20, the CBRT noted that inflation expectations were still elevated and that the key 1-week repo rate would have to be set above the inflation rate. It also dropped an earlier commitment to tighten monetary policy, in a departure from the previous board’s hawkish stance.

As a result of the decision, the Lira weakened against the greenback, with the USD/TRY accelerating towards the 8.1527 price mark.

Technical Levels to Watch

The USD/TRY’s advance fell short of the 8.20837 resistance, as the pair lacked bullish momentum following the weak stance of the greenback in Thursday’s forex market sessions. If bulls can generate sufficient buying momentum to break this resistance, 8.39858 (31 March high) would be the next logical target. Above this level, 8.57775 would also form an additional upside barrier. If the pair transcends this level, the Lira would be at its weakest levels ever against the greenback.

On the other hand, a lack of follow-through buying could send the pair back to the 7.99361 support. If this level gives way to selling pressure, 7.76045 becomes the next logical target, followed by the 7.60000 psychological support.