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USD/TRY has been settling in a tight range (between 6.80 and 6.86) since 11 June, trading today at 6.85. Economists at Credit Suisse expect the pair to trade in the 6.75-6.95 range following the central bank’s policy meeting today at 11:00 GMT, where the market consensus is that the policy rate will be cut by 25bps. 

Key quotes

“For the central bank’s policy meeting on 25 June, the analyst consensus expectation (according to Bloomberg) is that the policy rate will be cut by 25bps. This implies that investors think the central bank will moderate the sizes of its rate moves – after cutting the policy rate by 50bps on 21 May and by 100bps on 22 April and again on 17 March.”

“Although we think that risks are on the side of a larger cut than 25bps, we find it unlikely that USD/TRY would rise to levels such as 6.90 in a sustainable way even if a larger rate cut materializes.”

“Our base case is for USD/TRY to continue to range-trade between 6.75 and 6.95 for now. A break of this range (on either side) will probably require external pressure such as clear trends in the EUR/USD exchange rate.”