Jump to content

USD/TRY back above 17.00 as Erdogan pledges to keep cutting rates

Recommended Posts

USD/TRY is up over 4% so far this week, adding up to almost 15% gains in the last month.


Daniela Sabin Hathorn | Presenter and Analyst, London | Publication date: Wednesday 08 June 2022 

Turkish lira continues to weaken against the US dollar

USD/TRY is up over 4% so far this week, adding up to almost 15% gains in the last month.

Turkish President, Recep Tayyip Erdogan’s reluctance to acknowledge the need to control soaring inflation, which reached 73% last month, is causing the value of the lira to deteriorate.

Speaking after a cabinet meeting on Tuesday he dismissed the need to raise interest rates and vowed to continue cutting them in an effort to ease the pressure on consumers, as he believes inflation is just one of several problems that should begin to ease next year. He believes that the use of high borrowing costs to supress consumption is misguided.

His obsession with ultra-low rates, which he forces upon the central bank’s guidance, only adds more pressure to rising prices, creating a vicious cycle which is causing the central bank’s FX reserves to plunge.

The rise in food and energy prices is the main issue the Turkish economy is facing, which has been exasperated by the war in Ukraine.

Turkey imports over 90% of the energy it consumes, and the continued drop in the lira is only making imports more expensive, meaning the central bank must compensate domestic consumers in order to avoid appetite for foreign currencies.

The outlook for the Turkish lira remains very weak as long as Erdogan continues to play out his own inflation mandate. Especially at a time when most other central banks around the world are ramping up their monetary tightening in an attempt to make up for lost time that let consumer prices reach over 40-year highs in many countries.

The drop in FX reserves means the lira is facing a currency crisis, and the outlook for USD/TRY seems to be a one-way street towards the highs seen in December last year when Erdogan announced that a series of rate cuts would take place.

USD/TRY chart

The weekly chart is showing a clear bullish pattern of higher lows, forming an ascending trendline that is acting as support.

The weekly highs have also been breaking higher but the distance in the new peaks is shortening, meaning there is some resistance along the way.

There is a lack of clear resistance areas heading up to the December 2021 high given the magnitude of the move back then, but buyers should watch out for the area around 17.1829 as that was the weekly high on the week of the 13th of December 2021 before the move towards the high of 18.4372.

Link to comment

Create an account or sign in to comment

You need to be a member in order to leave a comment

Create an account

Sign up for a new account in our community. It's easy!

Register a new account

Sign in

Already have an account? Sign in here.

Sign In Now
  • General Statistics

    • Total Topics
    • Total Posts
    • Total Members
    • Most Online
      10/06/21 10:53

    Newest Member
    Joined 12/08/22 14:39
  • Posts

    • KLA Corp., Elliott Wave Technical Analysis KLA Corp.,(KLAC:NASDAQ): Daily Chart, August 12, 2022,  KLACStock Market Analysis:Looking for further continuation lower into wave c) of {ii}. Wave (b) may not be finished, however I am still looking for further downside after the initial move up we had in a five wave manner. KLAC Elliott Wave count:  Wave c) of {ii}. KLACTrading Strategy: wait for the end of wave {ii} to start building long positions to target ATH. KLAC Technical Indicators:We are above all EMAs which suggests we have resumed the uptrend. We could find support off the 200 EMA. TradingLounge Analyst: Alessio Barretta       KLACorp.,KLAC: 4-hour Chart, August 12 2022,  KLA Corp., Elliott Wave Technical Analysis KLAC Stock Market Analysis: Looking for completion of wave (b) to then resume downside into wave c) which could eveb be traded on short timeframes. KLACElliott Wave count:  Wave c of (b). KLAC Technical Indicators: We are facing resistance off the 20 EMA which could be a sign wave (b) is completed or nearly completed. KLACTrading Strategy: You could either look for shorts into wave c) or/and wait for a larger swing once wave {ii} is finished and target he upside with wave {iii}.
    • Elliott Wave Analysis TradingLounge 3-Daily Chart, 12 August 2022, Monero(XMRUSD) XMRUSD Elliott Wave Technical Analysis Mode: Motive Structure: Impulse Position: Wave I Direction Next higher Degrees: Wave C of Zigzag Details: The sub-wave of the first wave is about to end. Watch out for the reverse in Wave Cancel invalid Level: Monero(XMRUSD) Trading Strategy: The entry price is entering the last wave of the first wave. And it is going up to test resistance at MA50, waiting for a reversal in the second wave to enter the trend again. Monero(XMRUSD) Indicators: MACD and MACD Histogram have a reversal signal in an uptrend. TradingLounge Analyst: Kittiampon Somboonsod Elliott Wave Analysis TradingLounge 4H Chart, 12 August 2022, Monero(XMRUSD) XMRUSD Elliott Wave Technical Analysis Mode: Motive Structure: Impulse Position: Wave ((4)) Direction Next higher Degrees: wave I of C Details: Entering the fifth wave. Watch out for the reverse Wave Cancel invalid Level: Monero(XMRUSD) Trading Strategy: The short-term rise of the fifth wave After the fourth wave The level of the end of the triangle pattern is at The end of wave D, but if the price descends below the end of wave E, it is possible that the fifth wave may end at wave B. Monero(XMRUSD) Technical Indicators: MACD and MACD Histogram continue in the same direction.
    • Hi @ArturG, I added a response on the thread you shared. Effectively, the rule apply to UK clients. You can find the relevant text here:https://www.legislation.gov.uk/eur/2014/1286/body I hope that it helps ! All the best - Arvin
  • Create New...