USD/TRY advances confidently towards 16.00, as the lira plunges

• USD/TRY clinches fresh 2022 highs near 15.90 on Tuesday.
• The lira already depreciates more than 7% so far in May.
• Markets’ focus now shifts to the CBRT event next week.

Another day, another low in the Turkish lira. Indeed, price action in USD/TRY appears to have returned to the normality and resumes the uptrend, recording at the same time new 2022 tops near 15.90 on Tuesday.

USD/TRY keeps targeting 16.00 in the near term

USD/TRY extends the uptrend for the ninth session in a row on Tuesday and slowly approaches the round level at 16.00 against the backdrop of the relentless depreciation of the Turkish currency.

Indeed, the lira already loses more than 7% since the beginning of the current month, while the yearly decline surpasses 20% so far.

The escalation of geopolitical tensions since the Russian invasion of Ukraine in late February coupled with investors’ fears of a global slowdown continue to weigh on the lira and keeps the upside pressure in the pair well and sound for the time being.

In the meantime, the Turkish central bank (CBRT) will meet next week amidst speculation of a probable move on rates in light of the unabated upside pressure on inflation. It is worth recalling that domestic consumer prices rose almost 70% in April.

What to look for around TRY

USD/TRY keeps the upside well and sound for yet another session and seems to have shifted its focus to the 16.00 mark 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: Consumer Confidence (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. Upcoming Presidential/Parliamentary elections.

USD/TRY key levels

So far, the pair is gaining 1.98% at 15.8494 and faces the next hurdle at 15.8802 (2022 high May 17) 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).