Turkish Lira Prediction Following Mild CBRT Decision: USD/TRY

Briefly –

• USD/TRY near an ATH following the CBRT decision.
• The central bank didn’t alter interest rates at 14%.
• That happened even with surging Turkish inflation.

USD/TRY price remained upside after CBRT (Turkish Central Bank) ended its 2-day financial policy conference. While publishing this post, the pair hovered around 17.36, briefly beneath the 18.32 all-time high. USD/TRY increased by more than 68% from this year’s lowest mark.

CBRT Rate Decision

The Turkish Central Bank ended its financial policy conference and did what many analysts expected. It decided to leave the primary repo rate untampered at 14%. The committee had never altered interest rates since 2021 when it introduced multiple rate cuts.

The bank stated that Turkey’s economy was performing well amid a challenging atmosphere. CBRT attributed the impressive growth to massive external demand that has benefited from the weak lira. The tourism rebound also helped the Turkish economy. The bank commented on the inflation, stating that the bank will continue to employ all tools within the monetary strategy framework until indicators confirm permanent inflation fall and attain the 5% medium-term target.

The rate decision by CBRT came when Turkey’s CPI (consumer price index) maintained upside trends. Data revealed three weeks ago indicated inflation hiked to a 24-year peak in May 2022 at 73.5%. Meanwhile, unofficial studies suggest the nation’s inflation has increased by over 90%.

The primary cause behind inflation is the ongoing Turkish lira is weakening and surging energy costs. As a crucial energy importer, surging gas and oil prices are costing Turkey’s economy more cash. The next catalyst for USD-TRY is Powell’s upcoming comments during a congress committee testimony. On Wednesday, Powell told senators that Fed would maintain the hiking move until inflation starts declining.

USD-TRY Prediction

The daily price chart indicates USD-TRY extended upside following the recent CBRT rate decision. The pair surged past the ascending channel’s upper side. Also, USD/TRY climbed beyond 25- and 50-dau MAs as the RSI rose past the overbought region. Thus, the pair might keep surging as market players target the 18.33 all-time high. The narrative will only shift if CBRT signals rate hikes.