USD/TRY May Hit 10.00 Before Year’s End
What happened?
The Turkish lira has been pressed by Turkey’s central bank (CBRT). It has recently announced a bigger-than-expected rate cut: twice as deep as analysts expected. The reduction occurred after President Erdogan fired central bank officials as opposed to his intention for lower borrowing rates. Most analysts and investment banks foresee USD/TRY to exceed the psychological mark of 10.00.
Bloomberg said, “there’s now a more than 60% chance that the lira will weaken to 10 before January”. SEB AB: “Unless the central bank signals an intention to slow the cuts, USD/TRY will spike well above 10.00”.Besides, today, the Turkish lira got another headwind from President Erdogan. He claimed he had ordered the expulsion of the US and Western ambassadors.
Though lower rates can support some businesses and consumers, economists believe it also pushes the already high inflation up which can soon make the central bank change track. Actually, Turkey is alone in cutting interest rates. Other central banks all over the world are raising rates to decrease rising global price pressures.
Tech outlook
USD/TRY has become overbought and reversed down. The pair may drop to Friday’s low of 9.59. If it manages to fall below this support level, the doors will be open to the psychological level of 9.50. The long term remains bullish. Thus, after a short pullback, it should stick to its uptrend and reach 10.00 as many analysts forecast now.
