USD/TRY picks up further pace and clinches new highs near 15.50

• USD/TRY moves higher to new 2022 peaks around 15.50.
• Turkey Industrial Production expanded 9.6% YoY in March.
• Turkey Retail Sales grew 0.3% MoM also in March.

The Turkish lira continues to grind lower and lifts USD/TRY to new 2022 highs in the 15.50 region on Friday.

USD/TRY up on USD-strength, geopolitics

USD/TRY extends the monthly rebound for the seventh consecutive session on Friday, as the rally in the dollar remains unabated and geopolitical concerns keep the lira on the back foot so far.

On the latter, President Erdogan did not welcome news citing Sweden and Finland will apply for NATO membership amidst increasing tensions between the West and Russia over the war in Ukraine.

Data wise in Turkey for the month of March, Retail Sales expanded 0.3% MoM and 2.5% over the last twelve months. In addition, Industrial Production expanded at an annualized 9.6%, surpassing initial estimates.

What to look for around TRY

USD/TRY keeps the upside well and sound for yet another session and already left behind the 15.00 barrier. 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: Unemployment Rate (Tuesday).

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. Upcoming Presidential/Parliamentary elections.

USD/TRY key levels

So far, the pair is gaining 0.63% at 15.4618 and faces the next hurdle at 15.4832 (2022 high May 13) seconded by 18.2582 (all-time high December 20) and then 19.00 (round level). On the other hand, a drop below 14.6836 (monthly low May 4) would expose 14.5458 (monthly low April 12) and finally 14.5136 (weekly low March 29).