USD/TRY advances to weekly highs around 14.75

• USD/TRY extends the weekly rebound to the 14.75 area.
• The lira depreciates despite the weaker dollar.
• Turkey Treasury Cash Balance comes up next in the docket.

The lira loses further ground and lifts USD/TRY to the area of weekly highs in the 14.70/75 band on Thursday.

USD/TRY remains broadly side-lined

USD/TRY fades Wednesday’s small pullback and resumes the weekly upside in spite of the offered stance in the greenback and the better mood in the risk-linked galaxy.

The weekly retracement in the Turkish currency appears to be underpinned by the sour sentiment among investors after inflation figures in the country saw the CPI rise to 20-year highs above 61% in March. On this, finmin N.Nebati said on Wednesday that “if the exchange rate has come stable and interest rate are off the agenda, we will bring down inflation together sooner or later”.

It is worth recalling that Nebati pledged to bring down inflation to single digits during 2023. Good luck with that…

Later in the session, Turkey’s Treasury Cash Balance figures are due ahead of Friday’s End Year CPI Forecast.

What to look for around TRY

The lira keeps the range bound theme unchanged vs. the greenback, always in the area below the 15.00 neighbourhood for the time being. So far, price action in the Turkish currency is expected to gyrate around the performance of energy prices, the broad risk appetite trends, the Fed’s rate path and the developments from the war in Ukraine. Extra risks facing TRY also come from the domestic backyard, as inflation gives no signs of abating, real interest rates remain entrenched in negative figures and the political pressure to keep the CBRT biased towards low interest rates remain omnipresent.

Key events in Turkey this week: End Year CPI Forecast (Friday).

Eminent issues on the back boiler: FX intervention by the CBRT. 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. Structural reforms. Earlier Presidential/Parliamentary elections?

USD/TRY key levels

So far, the pair is gaining 0.24% at 14.7387 and faces the next hurdle at 14.9889 (2022 high March 11) seconded by 18.2582 (all-time high December 20) and then 19.00 (round level). On the other hand, a drop below 14.6150 (monthly low April 1) would expose 14.5136 (weekly low March 29) and finally 14.0920 (55-day SMA).