USD/TRY looks bid and flirts with 2022 highs near 14.6000

• USD/TRY approaches the YTD high near 14.60.
• Geopolitical tensions continue to weigh on the lira.
• The Turkish central bank is seen on hold next week.

The Turkish lira loses ground for yet another session and encourages USD/TRY to flirt with the area of 2022 peaks around 14.60 on Tuesday.

USD/TRY keeps looking to Ukraine

USD/TRY advances for the seventh session in a row and keeps the 4-week positive streak well in place on the back of persistent selling pressure hitting the Turkish currency, particularly exacerbated after the Russian invasion of Ukraine.

Indeed, as crude oil prices skyrocketed following the Russian offensive in response to disruption fears, the outlook for an economy highly dependent on energy imports like Turkey now looks more vulnerable, which in turn fueled the selling pressure on TRY.

In the meantime, consensus prior to the next meeting by the Turkish central bank (CBRT) on March 17 sees the One-Week Repo Rate unchanged at 14.00% in spite of domestic inflation surpassing 50% in February.

What to look for around TRY

Further upside momentum motivates the pair to flirt with YTD highs near 14.60, at the same time leaving behind the 2-month consolidation theme sustained by surprising lira stability. The Turkish currency, however, is forecast to remain under scrutiny amidst rampant inflation, negative real interest rates, the omnipresent political pressure to keep the CBRT biased towards low interest rates and fresh concerns stemming from the geopolitical scenario.

Key events in Turkey this week: Unemployment Rate (Thursday) – Current Account, End Year CPI Forecast, Industrial Production (Friday).

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. Earlier Presidential/Parliamentary elections?

USD/TRY key levels

So far, the pair is advancing 1.31% at 14.5442 and a drop below 13.7143 (low Feb.25) would expose 13.5091 (low Feb.18) and finally 12.4317 (low Feb.11). On the other hand, the next up barrier lines up at 14.6052 (2022 high Feb.24) seconded by 18.2582 (all-time high Dec.20) and then 19.00 (round level).