- The Turkish currency is appreciating sharply post-CBRT rate hike.
- Spot drops to fresh multi-day lows in the 4.46 area.
- The Turkish central bank (CBRT) raised the repo rate by 125 bp.
The Turkish Lira remains well bid on Thursday, dragging USD/TRY to fresh 5-day lows in the 4.46 area in the wake of the CBRT interest rate decision.
USD/TRY weaker on CBRT hike
TRY gained extra steam after the Turkish central bank (CBRT) raised the One-Week repo rate to 17.75% at today’s meeting, surpassing initial estimates.
Today’s rate hike adds to the recent 300 bps emergency rate hike and the subsequent simplification of monetary conditions published by the central bank.
The CBRT also emphasized its readiness to act in order to bring inflation back to the bank’s target and to preserve price stability.
The recent move by the CBRT is expected to bring in some stabilization around the Turkish currency, although risks still remain in light of the upcoming presidential elections, renewed pressures on prices due to the recent sharp decline in the currency and the high exposure of domestic companies to USD.
USD/TRY key levels
At the moment the pair is losing 1.82% at 4.4736 and a breach of 4.4410 (low May 30) would open the door to 4.2197 (low May 10) and finally 4.0037 (low Apr.18). On the other hand, the next hurdle is located at 4.5694 (10-day sma) seconded by 4.6791 (high Jun.4) and then 4.8032 (high May 24).
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