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Economists at Credit Suisse remain bearish TRY and are looking for a test of 8.58 in the USD/TRY pair.

The share of households’ FX deposits is around multi-year highs but it has been trending higher

“Since late March elevated FX implied yields and possible FX selling by state-owned banks have eased the pressure on the lira and allowed range-trading in USD/TRY between 8.00 and 8.40.”

“Renewed sources of USD-demand are likely to put pressure on the lira in Q2. Further increases in households’ FX deposits are possible as the outlook for real rates has deteriorated and corporates will need to buy USD in case external debt rollover ratios fall below 100% (like they did in 2020). Against this backdrop, we see a high-likelihood that USD/TRY will break above its all-time high from November (of 8.58) in Q2.”

“The central bank’s rate decision next week (15 April) is the main near-term risk-event to watch.”