Turkish currency is having another highly volatile session today. USDTRY launched a new week with an over-3% bullish price gap, following relatively calm trading throughout the previous week. Turkish monetary policy outlook remains a key driver for the country's currency and Turkish President Erdogan is nowhere near withdrawing from his unorthodox view that lower interest rates lead to lower inflation. Erdogan seems unmoved by ongoing TRY collapse and continues to exert pressure on central bankers to support his views.
The Central Bank of the Republic of Turkey is set to announce a decision on a 1-week repo rate on Thursday, 11:00 pm GMT. The CBRT Chief said recently that the central bank may be done with further rate cuts for now. TRY needs rate hikes in order to regain ground but lack of further cuts would be a positive as well. Nevertheless, it was reported this morning that Erdogan is set to meet with the CBRT chief today so it cannot be ruled out that the Turkish President may want to replace the current CBRT governor even before this week's meeting!
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Create account Try a demo Download mobile app Download mobile appUSDTRY spiked above 14.60 this morning, reaching a fresh all-time high. However, reversal came later on and given how quick it was, FX intervention from CBRT looks like a possible reason. While CBRT is still fighting, economists have already thrown in the towel - another 100 basis point rate cut is expected to be delivered on Thursday and a growing number of economists just do not see enough will from Turkish authorities to avert the situation.
USDTRY reached a new record high at the beginning of this week. However, the pair pulled back later on after an intervention from CBRT. Source: xStation5
