Breaking News
Get Actionable Insights with InvestingPro+: Start 7 Day FREE Trial Register here
Investing Pro 0
Ad-Free Version. Upgrade your Investing.com experience. Save up to 40% More details

What Is Driving Turkish Lira’s Trend?

By NAGA (Michalis Efthymiou)ForexJun 24, 2022 10:06AM ET
www.investing.com/analysis/what-is-driving-turkish-liras-trend-200626258
What Is Driving Turkish Lira’s Trend?
By NAGA (Michalis Efthymiou)   |  Jun 24, 2022 10:06AM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items
 

Exotic currency pairs are thinly traded instruments and, therefore, more volatile when compared to other currency pairs. One of the characteristics of exotic currency pairs is that they tend to form strong trends. At the same time, major and minor currency pairs tend to see trends change more frequently.

Exotic currency pairs have always been known to be volatile. However, the category has seen solid and long-lasting trends over the past six months. The Turkish Lira and the US Dollar is one of the main examples of an exotic pair with a robust and lasting trend. The pair has been on the rise for a whopping ten consecutive weeks. This is, of course, something that is rarely seen outside the exotic currency category.

USD/TRY price chart.
USD/TRY price chart.

Most economists and currency analysts advise that the rapid weakening of the Lira is the result of President Erdogan's intervention in the Central Bank’s Policy. Most Central Banks are independent of the government, but the fact that the Turkish Central Bank seems to be under the influence of the “debatable government'' has lowered the market’s confidence in the Lira, as a result, we are looking at decreased demand.

Erdogan has demanded that the bank lower interest rates even in the face of rapid inflation, which reached 73.5% in May. So, at the end of 2021, the rate was corrected from 19% to 14%, and, according to the country's leader, this policy is likely to be implemented again soon. The currency has been influenced both by hyperinflation and lower interest rates.

The extremely high levels of inflation, political instability, and lower interest rates have fueled the decline. The market is following Turkey’s Central Bank announcement regarding the weekly repo auction rate, which has not changed since December 2021. The prospects for monetary policy remain uncertain as the president pushes for lower rates, but inflation continues to grow higher. However, most analysts advise that a sharp increase in the interest rate should not be expected.

Furthermore, the current level of foreign reserves is also having a strong effect on the currency. This is something that is not often looked at, but the global reserves are known to have one of the biggest effects on exchanges. Due to the depreciation and volatility, many countries and banks have dumped their reserves in the Lira or, in most cases, decreased their exposure. The Turkish authorities have been negotiating with many countries in the region to exchange high levels of reserves to boost the Lira, however, they have been unsuccessful so far.

When looking at the price movement of USD/TRY, we can see that the US Dollar is currently in the driving seat. The drive movement is in the positive zone today but has not yet passed the current resistance level. The bullish price movement has halted at the resistance level over the past 2 weeks and traders are now currently waiting to see if the exchange can form a bullish breakout.

What Is Driving Turkish Lira’s Trend?
 

Related Articles

Kenny Fisher
New Zealand Dollar Extends Gains By Kenny Fisher - Aug 12, 2022

The New Zealand dollar’s rally continues. NZD/USD has reeled off four straight winning sessions and has enjoyed a superb week, climbing 3.14%. The U.S. dollar’s woes continue and...

What Is Driving Turkish Lira’s Trend?

Add a Comment

Comment Guidelines

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.

  • Use standard writing style. Include punctuation and upper and lower cases. Comments that are written in all caps and contain excessive use of symbols will be removed.
  • NOTE: Spam and/or promotional messages and comments containing links will be removed. Phone numbers, email addresses, links to personal or business websites, Skype/Telegram/WhatsApp etc. addresses (including links to groups) will also be removed; self-promotional material or business-related solicitations or PR (ie, contact me for signals/advice etc.), and/or any other comment that contains personal contact specifcs or advertising will be removed as well. In addition, any of the above-mentioned violations may result in suspension of your account.
  • Doxxing. We do not allow any sharing of private or personal contact or other information about any individual or organization. This will result in immediate suspension of the commentor and his or her account.
  • Don’t monopolize the conversation. We appreciate passion and conviction, but we also strongly believe in giving everyone a chance to air their point of view. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Write your thoughts here
 
Are you sure you want to delete this chart?
 
Post
Post also to:
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
 
Are you sure you want to delete this chart?
 
Post
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

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.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Continue with Google
or
Sign up with Email