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247trader

Turkish lira really having a hard time

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Looking like a really tough time for the Lira. In just one year it has devalued maybe 40% against the USD which is crazy. You'd have some good holidays on the cheap if you're looking for a last minute get away! Seems to be at a point of resistance at the moment but rising volume and higher lows....

 

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Copied across your line of resistance on this one and seems like it smashed through last night but has since pulled back, possibly to test that support (once resistance) line... 

Looks like retail traders are bidding the dip according to Bloomberg >> https://www.bloomberg.com/news/articles/2018-07-12/turkey-lira-rebounds-from-record-as-retail-traders-buy-into-dips 

More news here: https://www.bloomberg.com/quote/USDTRY:CUR

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@247trader  you're right, very tough time.  TRY could have a lot further to go over the next few weeks if Erdogan starts putting pressure on the central bank or, worse, curtails it's independence.

He's still fixed on lowering Turkish CB rates, and has appointed his son-in-law as finance minster (make of that what you will).  Has called interest rates  "the mother and father of all evil" & believes (unconventionally) that higher rates lead to higher inflation.  https://www.reuters.com/article/us-turkey-currency/turkish-lira-hits-record-low-after-erdogan-interest-rate-comments-idUSKBN1K20UQ

From a trading POV, TRY is very popular with both retail and institutional clients as a carry trade, in which you hold a long TRY position overnight to benefit from the positive swap rate. A falling TRY combined with Ergodan's (apparent) desire to cut CB rates might mean the end of a viable carry trade, and cause further downwards pressure should traders decide to liquidate/ switch to another high interest currency. It's difficult to gauge the impact of this as the vast majority of FX is OTC, but certainly a major factor. https://www.bloomberg.com/news/articles/2018-07-09/emerging-market-carry-trade-makes-comeback-as-dollar-rally-fades

Either way likely to be extremely volatile for a good few months, one to watch.

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