USD/TRY lurches higher as traders question the central bank’s independence, 10.00 next?

Perhaps for those used to trading the latest NFT or meme stock, the chart of USD/TRY may not look to unusual…but for FX traders, the ongoing collapse in the currency of a country in the top 20 of GDP is a truly astounding development.

What are Emerging Market economies?

Last week, my colleague Joe Perry identified the pair’s fresh record high on the back of geopolitical tensions and surging inflation, but the catalyst for the latest swoon in the lira is even more alarming. In a late-night decree on Thursday, Turkey’s President Recep Tayyip Erdogan dismissed several more of the central bank’s deputy governors, including the only one who opposed last month’s surprising interest rate cut.

In other words, traders’ fears that the nominally independent central bank is becoming hopelessly politicized are being realized, causing a widespread loss of confidence in the lira. According to central bank data, foreign investors held just $6B in government bonds at the halfway point of the year, down more than 90% from the $61.5B in Turkish bonds that foreign investors held as recently as 2013.

Trade USD/TRY now: Login or open a new account!

Turning our attention to the chart, USD/TRY is working on its seventh consecutive daily gain after blasting through the 9.00 level last week. With prices at a fresh record high, there are no levels of previous resistance nearby, though the 161.8% Fibonacci extension of the 3-month pullback that started this time last year looms up near 9.60 as a logical next target for bulls. Beyond that, the psychologically-significant 10.00 level may come into play next.

Source: StoneX, TradingView

It is notable that the 14-day RSI indicator is above 80, at an area that has previous marked short-term peaks in the USD/TRY exchange rate. That said, the country’s economic and monetary policy outlook hasn’t been this precarious before, so rates could certainly continue to surge regardless of an overbought reading on a technical indicator.

The next hurdle for the beleaguered currency is another CBRT monetary policy meeting on Thursday. Based on last week’s actions and the recent price action, investors a bracing for another interest rate cut, further deterioration in the value of the lira, and continued inflation in the country.

How to trade with FOREX.com

Follow these easy steps to start trading with FOREX.com today:

Open a Forex.com account, or log-in if you’re already a customer.
Search for the pair you want to trade in our award-winning platform.
Choose your position and size, and your stop and limit levels.
Place the trade.

StoneX Europe Ltd makes no representation or warranty and assumes no liability as to the accuracy or completeness of the information provided, nor any loss arising from any investment based on a recommendation, forecast or other information supplied. You should always seek independent advice as to your suitability to speculate in any related markets and your ability to assume the associated risks, if you are at all unsure. We are not under any obligation to update any such material. Any opinion made may be personal to the author and may not reflect the opinion of StoneX Europe Ltd.

CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 76% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money. Please ensure you fully understand the risks involved by reading our full risk warning.

FOREX.com is a trading name of StoneX Europe Limited, and FOREX.com/ie is a domain operated by StoneX Europe Ltd, a member of StoneX Group Inc. StoneX Europe Ltd, is a Cyprus Investment Firm (CIF) company registered to the Department of Registrar of Companies and Official Receiver with a Registration Number HE409708, and authorized and regulated by the Cyprus Securities & Exchange Commission (CySEC) under license number 400/21. StoneX Europe is a Member of the Investor Compensation Fund (ICF) and has its registered address at Nikokreontos 2, 5th Floor, 1066 Nicosia, Cyprus.

StoneX Europe Limited is registered with the German Federal Financial Supervisory Authority (BaFin). BaFin registration ID: 10160255

FOREX.com is a trademark of StoneX Europe Ltd, a member of StoneX Group Inc.

The statistical data and the awards received refer to the Global FOREX.com brand.

This website uses cookies to provide you with the very best experience and to know you better. By visiting our website with your browser set to allow cookies, you consent to our use of cookies as described in our Privacy Policy.

Through passporting, StoneX Europe is allowed to provide its services and products on a cross-border basis to the following European Economic Area ("EEA") states: Austria, Bulgaria, Croatia, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Ireland, Italy, Latvia, Liechtenstein, Lithuania, Luxembourg, Malta, Netherlands, Norway, Poland, Portugal, Romania, Slovakia, Slovenia, Spain, Sweden.

Additionally, StoneX Europe Ltd is allowed to provide Investment and Ancillary Services to the following non-EU jurisdiction: Switzerland.

StoneX Europe Ltd products, services and information are not intended for residents other than the ones stated above.

Tied Agent Information: KQ Markets Europe Ltd with Company No. HE427857.
Address: Athalassas 62, Mezzanine, Strovolos, Nicosia Cyprus.
Services Provided: Reception and Transmission of Orders.
Commencement Date: 06/12/2022
Website: KQ Markets - CFD Trading | KQ Markets

We may pay inducements, such as commissions or fees, to affiliates or third-party introducers for referring clients to us. This is in line with regulatory guidelines and fully disclosed where applicable.

StoneX Europe Ltd may make third party material available on this website which may contain information included but not limited to the conditions of financial markets. The material is for information purposes only and does not contain, and should not be construed as containing, investment advice and/or investment recommendation and/or an investment research and/or an offer of or solicitation for any transactions in financial instruments; any decision to enter into a specific transaction shall be made by the client following an assessment by him/her of their situation. StoneX Europe Ltd makes no representation or warranty and assumes no liability as to the accuracy or completeness of the information provided, nor any loss arising from any investment based on a recommendation, forecast or other information supplied. You should always seek independent advice as to your suitability to speculate in any related markets and your ability to assume the associated risks, if you are at all unsure. We are not under any obligation to update any such material. Any opinion made may be personal to the author and may not reflect the opinion of StoneX Europe Ltd.