Economists at Credit Suisse believes a rate hike from the CBRT is set to provide some support to the USD/TRY pair after Turkey’s lira dropped more than 10% in the third quarter.
Key quotes
“We maintain our short-term USD/TRY target at 7.65-7.75 (i.e. slightly lower than current spot level). We believe that the lira is going to be supported for now by further increases in the central bank’s effective policy rate.”
“We think that potential pullbacks in USD/TRY are limited to 7.50 as real rates are not high enough to create sizable selling of dollars by locals and the central bank and state-banks will likely buy USD on lira-rallies in order to rebuild their FX reserves.”
