USDTRY
The USDTRY is still pushing close to all-time highs near 7.500 as the Turkish Lira struggles to find support. The Lira has been under pressure after inflation was seen at 11.7% in August. It had been expected that inflation would slow after the economy fell almost 10% in the second quarter, but food and higher energy prices saw a sharp uptick.
The Lira has struggled further after the U.S. Dollar saw a recovery rally on strong economic data from the world’s largest economy. Data for U.S. inflation is released today but expectations are only for a 1.2% print.
Although the Turkish Lira has been under pressure the country’s central bank may act soon to arrest the slide and the soaring inflation rate. Turkey last took emergency interest rate measures in late-2018 into 2019, with interest rates near 25%, and that was marked with a price of 5 in the USDTRY pair. Interest rates have since tumbled to the current price of 8.25% and it’s possible we will see this move higher again in the next central bank meeting, or through emergency action.
Turkey is still involved in a spat with Greece and the EU over territory in the Mediterranean, which could hold oil and gas resources. The EU threatened Turkey officials with sanctions over their exploration moves in the waters. Turkey was critical of a statement by the EU and Mediterranean states on Friday, which it said was “detached from reality”, but added that the country was still open to talks with Greece.
The USDTRY saw a high of 7.498 on Wednesday and the price is looking to test the 7.500 level again. The ability to move through there will depend on the USD Index and today’s inflation. We can probably expect higher prices through 7.500 before the Turkish Central Bank intervenes.
