USD/TRY Maintains Dull Price Action

USD/TRY navigates a narrow range around the usual 13.50/60 band on Wednesday. The pair remains sidelined around the familiar 13.50/60 territory for an additional session, extending the muted price action that kicked in in mid-January.

The Turkish lira appears vigilant and follows the recent developments from a series of meetings between finance minister N.Nebati with investors in London.

Nebati outlined Ankara’s plans for a stable currency amidst an economic programme based on low borrowing rates, prevent further dollarization of the economy and bring inflation to single digits by mid-2023.

The Turkish minister also mentioned that his government is expected to announce a scheme to motivate households to convert holdings of gold into the domestic currency.

The pair keeps its multi-week consolidative theme well in place, always within the 13.00-14.00 range.

While skepticism keeps running high over the effectiveness of the ongoing scheme to promote the de-dollarization of the economy, thus supporting the inflows into the lira, the reluctance of the Turkish central bank to change the collision course and the omnipresent political pressure to favour lower interest rates in the current context of rampant inflation and very negative real interest rates are a sure recipe to keep the domestic currency under pressure for the time being.