Please try another search
The Turkish lira is in trouble again.
Last week, USD/TRY hit an all-time high amid more dire headlines for the Turkish economy and the monetary policy of the Central Bank of the Republic of Turkey (CBRT). On April 3rd, Bloomberg reported the following issues:
Despite the pressures, the Turkish Central Bank decided to hold all its short-term rates steady at its last monetary policy decision on March 7th. The Moody’s downgrade came the next day. The lira somehow managed to strengthen for two trading days after that. However, on March 12th, the lira weakened significantly as a breakout from the last consolidation range commenced. USD/TRY has gone nearly straight up for the last month now.
While USD/TRY trades at an all-time high, the Turkish lira has managed to experience extended periods of strength since the beginning of 2017.
A near relentless rise in USD/TRY since the financial crisis.
I had trouble trading the Turkish lira this time around. When USD/TRY launched higher to a new all-time high, I used a quick pullback to get long. However, a steep one-day pullback on March 29th stopped me out. Like a slingshot, USD/TRY zipped from there to yet more all-time highs. Instead of chasing this latest move, I decided to fade it in anticipation of the next pullback. I also hope to collect a decent amount of carry as financial markets settle down a bit with earnings in the U.S. Still, until the CBRT takes definitive action, it makes sense to short the lira in the middle of what looks like an extended uptrend; the trend needs to be steep enough to outpace the carry.
As the Turkish Central Bank raised interest rates over 400 basis points starting in early 2017, the lira steadily strengthened. So another rate hike campaign will likely have the same effect. With the Turkish government readying more stimulus for the economy – a new investment incentive package worth 128 billion liras (~$32B) and assistance for companies seeking bank financing – the CBRT will face yet more pressure to push rates higher. Of course, the other side of the pressure will continue to come from President Recep Tayyip Erdogan who wants LOWER interest rates…!
I am also warily keeping an eye on (re)mounting tensions between the U.S. and Russia over Syria, Turkey’s volatile neighbor to the south…
Be careful out there!
Full disclosure: short USD/TRY
GBP/USD is approaching a key support level ahead of the Fed and BoE meetings. The BoE is very unlikely to consider rate cuts before the Fed and the ECB. Meanwhile, Fed's hawkish...
Last week, the US dollar fluctuated as inflation data came in above expectations, sparking volatility. Amid talks of potential shifts in Federal Reserve policy, investors are...
The Australian dollar is sharply lower on Tuesday. In the European session, AUD/USD is trading at 0.6507, down 0.80%. The Aussie is on a nasty slide and has declined by 1.7% since...
Are you sure you want to block %USER_NAME%?
By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.
%USER_NAME% was successfully added to your Block List
Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.
I feel that this comment is:
Thank You!
Your report has been sent to our moderators for review
Add a Comment
We encourage you to use comments to engage with other users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind:
Enrich the conversation, don’t trash it.
Stay focused and on track. Only post material that’s relevant to the topic being discussed.
Be respectful. Even negative opinions can be framed positively and diplomatically. Avoid profanity, slander or personal attacks directed at an author or another user. Racism, sexism and other forms of discrimination will not be tolerated.
Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.