USD/TRY stays volatile above 7.60 post-CBRT

• USD/TRY clinched new all-time highs beyond 7.71 on Thursday.
• The Turkish central bank (CBRT) hiked rates by 200 bps to 10.25%.
• Daily support is seen around 7.55 soon after the rate hike.

After recording a new all-time peak above 7.71 earlier in the session, USD/TRY engaged in a downside correction to the 7.55 region soon after the interest rate decision by the CBRT.

USD/TRY recedes from fresh all-time highs

USD/TRY has quickly reversed the move to the new all-time high around 7.71 and dropped dramatically to the 7.55 region after the CBRT increased the One-Week Repo Rate by 200 bps to 10.25% (from 8.25%).

The move – largely expected (anticipated?) by market participants – looks to bring in some relief for the lira in light of the unremitting decline observed since late July-early August and to renew the credibility in the centra bank (if still any at all).

The CBRT also increased the Overnight Borrowing Rate and the Overnight Lending Rate by 200 bps to 8.75% and 11.75%, respectively.

The central bank noted the uncertainty stemming from the coronavirus pandemic keeps undermining the growth prospects, all against the generalized accommodative stance in economies across the world.   

The CBRT also acknowledges that the economic activity in Turkey keeps recovering at a firm pace along with the solid credit momentum and the expected rebound in exports as well as lower commodity prices and the depreciated lira should all support the current account in the next periods.

In the domestic docket, Turkey’s Capacity Utilization ticked higher to 74.6% in September and the Manufacturing Confidence eased a tad to 105.3 for the same period.

USD/TRY key levels

At the moment the pair is losing 0.86% at 7.6271 and a drop below 7.5522 (low Sep.24) would expose 7.4124 (low Sep.10) and finally 7.2019 (low Aug.21). On the upside, the next hurdle is located at 7.7151 (all-time high Sep.24).