USD/TRY looks volatile, recedes from new all-time highs past 13.000

• USD/TRY climbs above 13.0000 for the first time ever on Wednesday.
• The lira manages to regain ground and drags spot lower afterwards.
• Turkey seeks to clinch a swap agreement with UAE.

Following new all-time highs past the 13.0000 yardstick earlier in the session, USD/TRY now corrects sharply lower and revisits the 12.0000 area on Wednesday.

USD/TRY off fresh all-time peaks above 13.0000

USD/TRY now partially fades Tuesday’s nearly 12% advance following news that Ankara could be negotiating a swap agreement with the UAE on Wednesday.

It is worth recalling that the lira collapsed on Tuesday after President Erdogan candidly defended the ongoing easing cycle by the Turkish central bank (CBRT), particularly following last week’s 100bps reduction of the One-Week Repo Rate.

Since the September meeting, the CBRT reduced the policy rate by 400 bps to 15.00%, all in context where the domestic inflation came in just short of 20.00% YoY in October.

The lira is by far the worst performing EM currency so far this year, shedding near 43% vs. the US dollar. In addition, spot clinched a new record after advancing for eleven straight sessions, from November 9 to November 23.

Data wise in Turkey, the Capacity Utilization improved a tad to 78.1% in November and the Manufacturing Confidence eased marginally to 108.4 in the same period.

USD/TRY key levels

So far, the pair is losing 4.82% at 12.0694 and a drop below 10.9237 (10-day SMA) would expose 9.8325 (high Oct.25) and finally 9.4722 (monthly low Nov.2). On the other hand, the next up barrier lines up at 13.1105 (all-time high Nov.24) followed by 14.0000 (round level).