USDTRY Rallies on Expectations of Higher Interest Rates

The USDTRY jumped 2.3% on Monday after a leadership reshuffle that traders hope will lead to higher interest rates for the Turkish economy.

The drama began over the weekend after the Turkish President Recep Erdogan fired his central bank Governor Murat Uysal. This was followed by the resignation of Finance Minister Berat Albayrak, who is also Erdogan’s son-in-law. The shakeup has led to traders expecting a change of path from the country’s central bank. Uysal was replaced at the bank by former Finance Minister Naci Agbal.

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The Turkish Lira has lost around 30% of its value versus the U.S. dollar in 2020, and this continued after the central bank refrained from a rate rise in October despite rising inflation. Inflation is running at 11.89% but the CBRT projected in their October meeting that it could reach over 13%. The next central bank meeting will be on the 19th of November but we can’t rule out a move before that.   

The potential for a Joe Biden Presidency won’t likely do any favours for the Turkish Lira. Traders are worried that U.S.-Turkish relations could sour with possible sanctions over its purchase of Russian missile systems. Erdogan had somewhat warm ties to the White House under Trump but the country will likely find itself isolated after the recent threat of European sanctions over the Azerbailjan-Armenia fighting.

USDTRY Technical Outlook

The USDTRY made a move on Friday to new record highs but the price has now collapsed back to the uptrend channel. The path ahead will be determined by whether this provides support. The 8.000 and 7.800 levels are further support levels and short targets. The Investing Cube team is currently available to help all levels of traders with the Forex Trading Course or one-to-one coaching

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USDTRY Daily Chart

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