USD/TRY looks boring around 14.80, focus remains on Ukraine, oil

• USD/TRY trades within a narrow range in the 14.80/85 band.
• Turkey 10y bond yields in all-time highs near 27.00%.
• Markets’ focus remains largely on the geopolitical landscape.

The Turkish lira depreciates marginally vs. the greenback and motivates USD/TRY to navigate a tight range in the 14.80 zone at the end of the week.

USD/TRY remains capped by 15.00

USD/TRY moved into a consolidative phase in past sessions, always below the 2022 peak around 15.00 recorded earlier in the month.

The monthly uptrend in the pair mirrored the performance of crude oil prices, as the lira is expected to suffer the consequences of higher crude prices, as Turkey’s energy sector largely hinges on imports of the commodity.

No news from the Turkish central bank (CBRT) at its latest meeting seems to have not impacted the currency despite there was no announcements whatsoever regarding measures to curb the rampant inflation.

Somewhat in contrast with the global selloff in bonds, Turkey 10y reference bond yields trade a tad lower from Thursday’s all-time high around 28.30%.

In the domestic calendar, Turkey’s Capacity Utilization improved to 77.3% in March (from 76.6%) and the Manufacturing Confidence eased a bit to 108.5 in the same period (from 109.8).

What to look for around TRY

The lira keeps the range bound theme unchanged vs. the greenback, always in the area below the 15.00 neighbourhood, or yearly lows. 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.

Key events in Turkey this week: Capacity Utilization, Manufacturing Confidence (Friday).

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 0.25% at 14.8491 and a drop below 14.5217 (weekly low March 15) would expose 13.8983 (55-day SMA) and finally 13.7063 (low February 28). 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).