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- USD/TRY: Lira to remain subject to depreciation pressure even if CBRT stays on hold – Credit Suisse
USD/TRY: Lira to remain subject to depreciation pressure even if CBRT stays on hold – Credit Suisse
The rally in USD/TRY since last week elevates the importance of Thursday’s central bank meeting. Economists at Credit Suisse will wait for the rate decision outcome before formalising a new short-term target, which is most likely going to be above the current 9.60 target, even if the central bank remains on hold.
A few factors that limit the extent of USD/TRY upside are in play
“We will wait for Thursday’s rate decision outcome before formalising a new short-term target which is most likely going to be higher than the 9.60 target which we set on 20 October, even if the central bank remains on hold.”
“We highlight a few mitigating factors which could limit USD/TRY upside if the central bank does not surprise markets on the dovish side again tomorrow – these are historical sell-off retracements patterns in USD/TRY, possible FX interventions and light international positioning.”
“In the end, the central bank may feel forced to reverse its recent policy rate cuts by raising the policy rate; but we suspect that more USD/TRY upside is needed before that happens.”
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