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Turkish lira’s one-month risk reversal, which measures the spread between call and put prices, jumps to 4.2250 – the highest level since March 2020, also portraying the third positive reading, indicating increased demand for call options.  

A call option gives the purchaser the right but not the obligation to buy the underlying asset at a predetermined price on or before a specific date.  Therefore, a rise in the one-month risk reversal suggests investors are adding bets to position for TRY strength.

This comes at a time when the currency wobbles around the monthly top, also the highest since November 2020.

That said, USD/TRY snaps a four-day uptrend while taking rounds to 8.3270, down 0.11% intraday, ahead of Wednesday’s European session.