USD/TRY off all-time highs, back near 9.1500

• USD/TRY clinched new all-time peaks near 9.2000.
• President Erdogan dismissed three members of the CBRT.
• The next target of note for the pair comes at the 10.0000 mark.

The Turkish lira depreciated to new all-time lows vs. the dollar and pushed USD/TRY well beyond the 9.000 barrier on Thursday.

USD/TRY now targets… the moon?

USD/TRY quickly climbed to new all-time highs in the 9.1800 area on Thursday after market participants aggressively sold the lira in response to another spark of mistrust in the already complicated relationship (if any at all) between President Erdogan’s administration and the Turkish central bank (CBRT) (still) led by S.Kavcioglu.

Indeed, the lira collapsed to record lows after President Erdogan sacked on Thursday two deputy governors of the CBRT and a committee member, all of them having disagreed with the rate cut by the central bank at its September meeting. It is worth recalling that the CBRT reduced the One-Week Repo Rate by an unexpected 100 bps to 18% last month, catching everybody off guard as the consensus was largely tilted to an “on hold” stance.

Investors’ shift has now gyrated to the upcoming CBRT event on October 21, while the door to another rate cut looks wide open no matter what consensus expects or rationality calls for.

USD/TRY key levels

So far, the pair is gaining 0.85% at 9.1546 and a drop below 8.9510 (10-day SMA) would aim for 8.8585 (20-day SMA) and finally 8.8297 (monthly low Oct.1). On the other hand, the next up barrier lines up at 9.1835 (all-time high Oct.14) followed by 10.0000 (round level) and then… ?