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  • USD/TRY clinches fresh historic highs around 7.29.
  • Increasing jitters on Turkish FX reserves hurt the Lira.
  • Turkey 5-year Credit Default Swaps (CDS) hover around 542 pts.

Another day, another drop of the Turkish lira. In fact, the lira remains well entrenched into the negative territory and it has helped USD/TRY to record new all-time peaks just below 7.29 the figure earlier on Thursday.

USD/TRY looks to the CBRT

Shedding nearly 4% since Monday’s open, the Turkish lira is by far the worst performing EM currency so far this week/month.

In fact, the selling pressure has been on permanent rise around TRY as of late in response to the inability of domestic banks to keep the depreciation of the currency under control (ish) via selling FX reserves.

Indeed, all the attention has now gyrated to the Turkish central bank (CBRT), which is expected to announce potential measures to stop TRY bleeding, at least in the short-term horizon.

It is worth recalling that the CBRT started an aggressive easing cycle (well against markets’ consensus) back in the summer of 2019, reducing the benchmark rate by 1,575 bps, taking real interest rate to the negative ground.

USD/TRY key levels

At the moment the pair is gaining 3.65% at 7.2876 and faces the next hurdle at 7.2926 (all-time high Aug.6). On the downside, immediate support is located at 7.0023 (high Jul.29) followed by 6.8503 (55-day SMA) and finally 6.8139 (monthly low Jul.21).