USDTRY
USDTRY consolidates close to record highs as it remains the only currency that is devaluating against the USD despite the greenback weakness. The Turkish lira has lost over 25% against the USD in 2020 as Turkey’s economy struggling to return to growth after the coronavirus crisis.
Moody’s Investors Service downgraded Turkey’s credit rating to B2 from B1 keeping the negative outlook and warned of a balance of payments crisis. Turkey’s debt is expected to increase from 32.5% of GDP in 2019 to 42.9% in 2020 and then above 46% of GDP in 2021. The FX Reserves have fallen more than 40% this year to $44.9 billion amid the government’s attempt to stabilize the foreign exchange market.
Moody’s sees high geopolitical risks in many fronts while the further deterioration in the Eastern Mediterranean front would accelerate the downside pressures.
Turkey’s GDP contracted by 9.9% in the second quarter, while inflation climbed to 11.77%, almost twice the Central Banks target.
Earlier today reported that Industrial Production in Turkey grew by 8.4% in July and returned to pre-coronavirus level. The easing of the lockdown measures and government stimulus has boosted industrial production in the last months.
USDTRY is 0.20% higher at 7.4928 just shy of the record highs at 7.4987. The technical picture is clearly bullish, and all the pullbacks should be considered as a buying opportunity. I have mentioned in my previous article that Turkish Lira weakness will persist: USDTRY Hits Another Record High, as Turkish Lira Weakness Persist.
The correction on Thursday moved the pair outside of the overbought area, thus leaving room for a breakout above the all-time highs. The only resistance in the chart, for now, is the record highs at 7.4987. A break above would target the 8.00 psychological mark.
On the downside, support for USDTRY stands at 7.4795 the daily low. More bids would emerge at 7.4184 the low from September 10. If bears break that support, then the next level to watch is 7.2872 the low from August 28.
