Turkish Lira Eyes Best Week in 40 Years, USD/TRY Rapidly Sinks in Illiquid Conditions

[MongiIG]

TURKISH LIRA, USD/TRY – MARKET ALERT

• Turkish Lira suddenly appreciates during illiquid year-end conditions
• TRY is aiming for the best week in almost 40 years at the time of writing
• USD/TRY down about 40% from the December 20th high at 18.362

The Turkish Lira suddenly and quite rapidly appreciated heavily against the US Dollar during late Tuesday Asia-Pacific trade. On the weekly chart below, USD/TRY was down about 32% around 6:30 GMT on December 21st. This is setting the currency pair on course for the most aggressive and swift appreciation in almost 40 years.

The timing of the move comes in the aftermath of measures announced by President Recep Tayyip Erdogan to help bolster the Lira. One of these measures includes a program to protect citizens’ savings from swings in the local currency. This response has come following deep losses in TRY towards the end of this year, which has seen USD/TRY soar over 120% from the September low.

It should be noted that this move comes amid illiquid trading conditions due to year-end holidays. In this kind of trading environment, with fewer market participants, breaking news tends to have a more pronounced impact on financial markets. Even currencies, which are by definition the most liquid financial asset, are not always invulnerable. Granted, within the sphere of tradeable currencies, Emerging Market ones tend to be relatively volatile compared to their developed peers.

 

USD/TRY WEEKLY RATE OF CHANGE

Chart Created Using TradingView

TURKISH LIRA DAILY CHART

On the daily chart, measuring the move in USD/TRY from the December 20th peak (18.362) to the low of 11.114 (at the time of writing), this presents a 40% decline in the pair. Prices swiftly took out the 20-day Simple Moving Average, pausing declines on the 50-day line. The 100 line sits below 10.

Chart Created Using TradingView

 

Written by Daniel Dubrovsky, Strategist for DailyFX.com, 21 December 2021.

[RCtrader]

Sadly, I went bullish on the usd/try pair too early. Although, I'm sure there are some Asian' traders that caught the best entry. 

[MongiIG]

18 hours ago, RCtrader said:

Sadly, I went bullish on the usd/try pair too early. Although, I'm sure there are some Asian' traders that caught the best entry. 

Hi @RCtrader

Erdogan announced an unorthodox new policy to compensate losses on domestic TRY accounts due to TRY/USD depreciation.

Traders said the policy amounted to “hidden” rate hikes, funded via the public purse, and USD/TRY crashed 25% from highs.

The pair is now trading in the 13.50 area having been as high as the 18.30s earlier in the session.

NEWS | 12/20/2021  | By Joel Frank. FXStreet

[MongiIG]

2 hours ago, MongiIG said:

Hi @RCtrader

Erdogan announced an unorthodox new policy to compensate losses on domestic TRY accounts due to TRY/USD depreciation.

Traders said the policy amounted to “hidden” rate hikes, funded via the public purse, and USD/TRY crashed 25% from highs.

The pair is now trading in the 13.50 area having been as high as the 18.30s earlier in the session.

NEWS | 12/20/2021  | By Joel Frank. FXStreet

Turkish Lira Stages Biggest Rally Since 1983

The Turkish lira's rally is back on after it weakened in early trade. The currency is climbing again after staging its biggest rally in yesterday's trading session since the 1980s. The jump came after President Recep Tayyip Erdogan announced new measures to bolster the currency. Bloomberg's Simone Foxman reports on "Bloomberg Markets: Europe."

[RCtrader]

Some said this was tried in the 1970s and it failed. My opinion is that with Erdogan in power, there is just one end for the Turkish lira, as it happened with the Argentinian peso and the Venezuelan bolivar. Hyper inflation and devaluation. 🤔

[MongiIG]

14 hours ago, RCtrader said:

Some said this was tried in the 1970s and it failed. My opinion is that with Erdogan in power, there is just one end for the Turkish lira, as it happened with the Argentinian peso and the Venezuelan bolivar. Hyper inflation and devaluation. 🤔

Hi @RCtrader

History of Turkish Lira

Turkey, as a country, has a long, turbulent history, and its currency is no different. The Lira has gone through many changes since it was introduced as Turkey’s currency.

The Lira was introduced as a form of currency in 1844 as the Ottoman Lira, replacing the kurus as the primary unit of currency in the Ottoman Empire. Following the fall of the Ottoman Empire and the creation of the Republic of Turkey in 1923, the Lira became known as the Turkish Lira.

The Turkish Lira remained a fairly stable currency until the 1970s, when inflation began to devalue the Lira quickly. It became so devalue that Turkey was forced to scrap the old Lira and create a new currency. For reference, the following is a chart of the yearly average value of the Lira over time leading up to 2005.

• In 2005 the New Turkish Lira was introduced at a value of 1,000,000 old lira for 1 New TRY.
• In 2009 a new series of banknotes was introduced to help prevent counterfeiting, and the “new” was taken off.
• Since 2009 TRY banknotes have remained the same.

For the full article: History of Turkish Lira

Related article: What is the Turkish Lira (TRY)?