USD/TRY Approaches 13.70

The Turkish lira has added to its Friday’s losses and lifts USD/TRY pair to the upper end of the recent range near 13.70 on Monday.

The USD/TRY pair flirts with the area of recent highs near 13.70 despite the renewed offered stance in the greenback and amidst the broad-based upbeat mood surrounding the risk-associated universe.

In fact, investors remain vigilant on the developments from the Russia-Ukraine-US standoff ahead of the Blinken-Lavrov meeting on February 24 in Geneva, while there is still a ray of hope around a diplomatic solution of the conflict.

In the domestic calendar, Foreign Arrivals rose 151.40% in January vs. the same month of 2021, while the Central Government Debt Stock rose to TL 2,844.4B during last month.

The pair keeps its multi-week consolidative theme well in place around the mid-13.00s for the time being. The lira, in the meantime, remains surprisingly stable so far this year, particularly after the government announced a lira time-deposit protected scheme in late December and after the CBRT left the policy rate unchanged in the last couple of meetings.

However, the lira is expected to remain under scrutiny amidst rampant inflation, negative real interest rates and the omnipresent political pressure to favour lower interest rates.

Key events in Turkey this week: Central Government Debt Stock (Monday) – Capacity Utilization, Manufacturing Confidence (Tuesday) – Economic Confidence Index (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. Much-needed structural reforms. Earlier Presidential/Parliamentary elections?

So far, the pair is advancing 0.13% at 13.6456 and a drop below 13.4317 (weekly low Feb.11) would expose 13.2327 (monthly low Feb.1) and finally 12.7523 (2022 low Jan.3). On the other hand, the next up barrier lines up at 13.6767 (weekly high Feb.15) seconded by 13.9319 (2022 high Jan.10) and then 18.2582, namely all-time high 20 December.