USD/TRY looks slightly bid within a tight range near 14.80

• USD/TRY advances marginally around the 14.80 region.
• Turkey 10y yields climb to record highs past 25.00%.
• The risk-on sentiment reclaims ground lost.

The Turkish lira remains on the defensive albeit marginally and lifts USD/TRY to the 14.85 region on Tuesday.

USD/TRY remains capped by 15.00

USD/TRY advances for the fourth consecutive session so far on Tuesday despite the sentiment appears to be favouring the risk complex.

The Turkish lira, in the meantime, remains unable to benefit from the better mood in the riskier assets, apparently following hopes of a positive outcome at the ongoing Russia-Ukraine talks.

The selling pressure in the lira comes amidst a new record high in the Turkey 10y benchmark note yields, this time trespassing the 25.0% level.

What to look for around TRY

The lira eases some ground and trades closer to the area of YTD lows vs. the US dollar. In the very near term, 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 Russia-Ukraine peace talks. Extra risks facing TRY also come from the domestic backyard, as inflation gives no signs of easing, real interest rates remain negative and the political pressure to keep the CBRT biased towards low interest rates remain omnipresent.

Eminent issues on the back boiler: 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 0.15% at 14.8430 and a drop below 14.5217 (weekly low March 15) would expose 13.7063 (low February 28) and finally 13.5091 (low February 18). On the other hand, the next up barrier lines up at 14.9889 (2022 high March 11) seconded by 18.2582 (all-time high December 20) and then 19.00 (round level).