USD/TRY extends the upside to 13.6000, keeps the range bound theme intact

• USD/TRY keeps the consolidation well in place on Friday.
• Turkey’s CPI approached the 50% YoY in January.
• Focus is now on the CBRT event later in the month.

The Turkish lira depreciates once again and motivates USD/TRY to clinch the fourth consecutive session with gains, this time revisiting the 13.60 region on Friday.

USD/TRY up post-CPI, attention shifts to the CBRT

USD/TRY advances since Tuesday, although it remains well entrenched into the 13.00-14.00 range well in place since the beginning of the new year.

The lira came under pressure once again after inflation figures released on Thursday showed consumer prices rose at an annualized 48,69% in January and 11.10% from a month earlier. In addition, Producer Prices rose 10.45% inter-month and 93.53% vs. January 2021.

In the meantime, the pair should keep the side-lined mood unchanged in the near term ahead of the monetary policy meeting by the Turkish central bank (CBRT) on February 17.

Despite finmin N.Nebati already envisaged inflation around 50% later in the year, it seems that scenario could materialize much sooner than anticipated, which should morph into extra pressure for both the domestic currency and the government in the form of actions to finally start tackling the issue.

What to look for around TRY

The pair keeps the multi-session consolidative theme well in place, always within the 13.00-14.00 range. While skepticism keeps running high over the effectiveness of the ongoing scheme to promote the de-dollarization of the economy – thus supporting the inflows into the lira -  the reluctance of the CBRT to change the (collision?) course and the omnipresent political pressure to favour lower interest rates in the current context of rampant inflation and (very) negative real interest rates are a sure recipe to keep the domestic currency under pressure for the time being.

Eminent issues on the back boiler: Progress (or lack of it) of the government’s new scheme oriented to support the lira via protected time deposits. Constant government pressure on the CBRT vs. bank’s credibility/independence. Bouts of geopolitical concerns. Much-needed structural reforms. Growth outlook vs. progress of the coronavirus pandemic. Earlier Presidential/Parliamentary elections?

USD/TRY key levels

So far, the pair is advancing 0.17% at 13.5389 and a drop below 13.2657 (55-day SMA) would expose 13.2327 (monthly low Feb.1) and finally 12.7523 (2022 low Jan.3). On the other hand, the next up barrier lines up at 13.9319 (2022 high Jan.10) followed by 18.2582 (all-time high Dec.20) and then 19.0000 (round level).