USDTRY
The USDTRY price is up by 0.70% today, pushing the Turkish lira to the lowest level on record. The pair is trading at 8.4832.
The Turkish lira has been under pressure in the past few years. The currency has dropped by more than 40% against the British pound and by more than 50% against the euro. It has also fallen by 45% against the US dollar. That has pushed some market-watchers to question whether the lira is becoming worthless.
The tragic decline of the Turkish lira has been going on for more than a decade. Indeed, in the past ten years, the currency has dropped by more than 280% against the euro, dollar, and pound. You can see this price action in the chart below.
This year, the USDTRY has declined because of the pandemic and the manoeuvres by the central bank. For example, a few months ago, the bank put in place measures to prevent traders from shorting the currency. That move, together with other interventions, led many holders to shift their resources to other currencies.
At the same time, the bank has implanted about nine interest cuts this year. That brought the real yield to the negative zone, making the country to have the lowest rates in the world. Behind the scenes, the bank has been doing some backdoor manoeuvres to boost the lira instead of raising rates.
Today, the USDTRY is rising as investors react to the tepid inflation. Data by the statistics agency showed that consumer inflation rose from 11.75% in September to 11.89% in October. That was slightly lower than the 11.90% that analysts polled by Reuters were expecting. On an MoM basis, the CPI rose by 2.13%. Just last week, the bank increased its forecast for inflation to 12.1%.
The daily chart shows that the USDTRY has been rising for the past nine consecutive days. As a result, it is above the 50-day and 25-day exponential moving averages. The Relative Strength Index (RSI) – and other oscillators – have continued to rise too.
Therefore, the path of least resistance for the pair is up, which could see bulls attempt to push it to 9.000 in the next few weeks. However, bulls should be aware that the situation could change this week, depending on the outcome of the presidential election in the US.
