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CBRT Raises FX Reserve Requirement, Prompting Decline in the USD/TRY

USDTRY Turkish lira
USDTRY Turkish lira

The USD/TRY declined intraday as the Central Bank of the Republic of Turkey (CBRT) raised the reserve requirement ratios for foreign currency deposits to dry up demand for external currencies in favour of the Lira.

The Lira gained 0.53% against the greenback and looked set for the second day of gains. The USD/TRY did not react much to the US ISM Manufacturing PMI data, as traders preferred to wait for Friday’s Non-Farm Payrolls numbers.

The Lira has struggled against the greenback since February, with the USD/TRY rising from 6.89 to top at 8.80. The pair has significant tailwinds backing it up, as the flight to safety due to the spreading COVID-19 Delta strain and the hawkish stance of the Fed serving to add to dollar demand.

USD/TRY technical levels

The technical rejection at 8.74610 provided the impetus for Thursday’s run to the south, which now targets 8.57488, barring any headwinds against the bears. Below this level, 8.36986 becomes a new target, with 8.19744 and 8.04069 waiting in the wings if the decline continues.

Bulls need to see a break of the 8.74610 and 8.8000 psychological resistance on the flip side if the USD/TRY is to form new highs. The 78.6% Fibonacci extension at 8.95736 is the initial target for bulls, followed by 9.08339 (88.6% Fibo extension). 

USD/TRY Daily Chart

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