USD/TRY Retreats On Fears About Erdogan’s New Economic Programme

The USD/TRY pair is set to end the week 20% higher, though the rally has stalled at resistance in the 13.50 area. Traders and investors remain skeptical as President Erdogan continues to push “new economic programme” despite surging inflation.

The Turkish lira has lost more than 40% of its value versus USD this year, its worst annual performance in two decades. The USD/TRY pair is on course to post a fifth successive day of gains during which time it has rallied from underneath the 11.00 mark to current levels just above 13.00.

That marks a roughly 20% rally on the week and corresponds to an approximate 18.5% depreciation in the value of the lira versus the US dollar.

The pace of USD/TRY’s rally has subsided somewhat this Friday, however, with the “only” trading higher on the day by about 0.6%, a tiny intra-day move in the context of recent USD/TRY volatility. The pair seemed to find resistance at its 21-day moving average which currently resides close to 13.50.

Renewed calls from Turkish President Recep Erdogan on Friday for Turks to have trust in his “new economic programme” has not had any notable intra-day reaction on the price action.

Erdogan slammed dollarization/the use of other medium of exchange in the Turkish economy, saying “I want all my citizens to keep their savings in our own money, to run all their business with our own money, and I recommend this”.

“Let’s not forget this”, Erdogan added in a speech before a Turkish business group, “as long as we don’t take our own money as a benchmark, we are doomed to sink. The Turkish Lira, our money, that is what we will go forward with. Not with this foreign currency, that foreign currency.”