USD/TRY flirts with YTD highs near 13.90

• USD/TRY moves higher and approaches the 13.90 region.
• The lira remains on the defensive despite the risk-on mood.
• Turkey 10y bond yields rose to 2-week highs past 21%.

The Turkish currency depreciates further and now sends USD/TRY back to the proximity of 13.90 on Wednesday.

USD/TRY up on geopolitical risks

USD/TRY approaches the area of YTD highs just below the 14.00 barrier as the Turkish currency remains on the back foot in response to rising geopolitical concerns and equally increasing uncertainty surrounding the conflict in Easter Ukraine.

The deterioration of the Russia-Ukraine scenario poses heightened risks to Turkey’s macro stability, while the prospects of higher crude oil prices in response to potential supply disruptions is also another factor weighing on the lira so far.

Further out, the proximity of the start of the Fed’s tightening cycle also puts the lira under extra scrutiny amidst the elevated levels of foreign debt held by domestic companies and lenders.

USD/TRY key levels

So far, the pair is advancing 0.44% at 13.8352 and a drop below 13.4317 (weekly low Feb.11) 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 13.9013 (monthly high Feb.22) seconded by 13.9319 (2022 high Jan.10) and then 18.2582 (all-time high Dec.20).