USD/TRY moves closer to 3.81 on CBRT decision

• Turkish central bank (CBRT) leaves rates unchanged at today’s meeting.
• TRY depreciates to the vicinity of 3.81 in the wake of the CBRT decision.
• US ADP, Trade Balance results and the Fed’s Beige Book in centre stage.

The Turkish Lira is depreciating vs. the greenback on Wednesday and is lifting USD/TRY to challenge daily highs near the 3.8100 handle.

USD/TRY focused on US docket

The pair picked up further pace after the Turkish central bank (CBRT) left unchanged its monetary conditions at today’s meeting.

In fact, the CBRT left the Overnight Lending Rate at 9.25%, the Overnight Borrowing Rate at 7.25% and the One-Week Repo Rate at 8.0%. In addition, the Late Liquidity Window (LLW) lending rate stayed at 12.75%.

In its statement, the central bank noted the economic activity remains strong along with a healthy domestic demand. In addition, demand overseas continues to support the exports sector.

Regarding prices, the CBRT acknowledged rising inflation and inflation expectations still poise risks, while core prices stay elevated, therefore prompting the continuation of the tight monetary conditions.

In the meantime, spot is extending the consolidative theme between 3.70 and 3.85 prevailing since the start of the year, all following the 7% decline in TRY during last year – the second worst EM performer.

Price action around the buck, crude oil dynamics and the almost omnipresent geopolitical jitters around Kurds remain poised to drive the sentiment around spot in the next months.

USD/TRY key levels

At the moment the pair is up 0.29% at 3.8051 and a breakout of 3.8139 (100-day sma) would aim for 3.8296 (high Mar.5) and finally 3.8456 (high Feb.9). On the flip side, the next support is located at 3.7827 (low Mar.6) followed by 3.7729 (low Feb.26) and then 3.7345 (low Feb.16).