- Summary:
- The USDTRY slid 1% to a fresh record low of 8.30 versus the U.S. dollar after the Turkish central raised its inflation target by 3%.
The USDTRY slid 1% to a fresh record low of 8.30 versus the U.S. dollar after the Turkish central raised its inflation target to 13.5% for the year-end. The currency has been under pressure since July after a series of negative events such as the Armenia situation and debt downgrades in the country.
The bank’s governor Murat Usyal said of the Lira:
“In the period ahead, we can take all the necessary steps, including on policy interest rates, to control inflation by monitoring price developments”. He also added that the lira was “extremely undervalued”.
The CBRT cut interest rates to 8.25% to deal with the virus slowdown but this led to higher inflation, with the inflation rate now stuck at 11.75%. The bank expects year-end prices to be around 13.5% and we may see further action on interest rates in future meetings. The only headwind to this is that Turkish President is a believer that higher borrowing costs fuel inflation, which is opposite to the views of global central banks. The inflation rate is now showing that this is the case, particularly in Turkey.
Erdogan’s Turkey is also caught up in international spats, with the country active in Syria and more recently, getting caught up in a conflict between Armenia and Azerbaijan, for which the EU threatened Turkey with sanctions.
USDTRY Technical Outlook
On the flip side, immediate support for Dow Jones index is at 25,096 the low from yesterday. Next support for the Dow Jones will be met at 24,952 the 50-day moving average. A break below 24,952 might open the way for a test of 24,755 the 100-day moving average. The Investing Cube team is currently available to help all levels of traders with the Forex Trading Course or one-to-one coaching.
USDTRY Daily Chart
