Market news

18 November 2021

USD/TRY: All eyes on CBRT Interest Rate Decision as lira pokes record low near $11.00

  • USD/TRY remains on the front foot around all-time high during the eight-day uptrend.
  • Turkish President Erdogan pushes for low interest rates.
  • CBRT is expected to cut 100 bps off the benchmark rate but bears may not be welcomed.
  • Options market suggests receding bullish bias ahead of the key event.

USD/TRY grinds higher around $10.90 after refreshing the all-time peak with $10.98 level during early Thursday. In doing so, the Turkish lira (TRY) pair portrays the cautious sentiment ahead of the key interest rate decision from the Central Bank of the Republic of Turkey (CBRT).

Ahead of the CBRT decision, Turkish President Recep Tayyip Erdoğan marked a push towards a rate hike while terming higher interest rates as the cause of the inflation. “Erdogan said he would lift the interest rate burden from people and urged businesses to take advantage of aggressive monetary easing since September to invest, hire and export goods,” per Reuters.

The Turkish leader has already pushed the CBRT towards 300 basis points (bps) of rate cuts since September and is up for more. However, markets seem to have tired of hearing rate cuts from the Turkish central bank and hence have recently portrayed easy bullish bias, as per the options market data.

That said, One-month risk reversal (RR) of USD/TRY, a gauge of calls to puts, retreats to 0.075 after jumping the most since March 23 on Tuesday with 1.175 figures, per the latest data from Reuters.

Moving on, the CBRT is expected to cut the benchmark policy rate from 16% to 15% after announcing a 200 bps of rate cut in the last meeting. Even so, major analysts remain indifferent to the USD/TRY upside. Ahead of the event, TD Securities highlight Turkish President Erdogan’s comments to extend their previous call of a 50 bps rate cut while saying, “Erdogan's comment, however, is reversing this expectation, and so we now see risks towards a larger than 50bp cut. With this in mind, the lira will remain under significant pressure and we don't think the CBRT can endure this stress for much longer, suggesting rate hikes and other emergency currency-support measures are becoming more and more likely in the coming few weeks.”

It should be noted that the Fedspeak and US Jobless Claims, as well as Philadelphia Fed Manufacturing Survey for November, are extra catalysts to watch.

Technical analysis

Although overbought RSI conditions do suggest the pair’s pullback towards the $10.00 threshold, USD/TRY bears will remain cautious until the quote stays beyond an ascending trend line from August 2018, near $9.25 at the latest. That said, October’s top near $9.85 may act as an additional downside filter.

Market Focus

Material posted here is solely for information purposes and reliance on this may lead to losses. Past performances are not a reliable indicator of future results. Please read our full disclaimer.

Open Demo Account
I understand and accept the Privacy Policy and agree that my name and contact details can be used by TeleTrade to contact me about the information I have selected.
23 International Awards
Have a question?

We are ready to assist you in every step of your trading experience
by providing 24/5 multilingual customer support.

Follow us

Risk Warning: Trading Forex and CFDs on margin carries a high level of risk and may not be suitable for all investors. CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 72.72% 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. Prior to trading, you should take into consideration your level of experience and financial situation. TeleTrade strives to provide you with all the necessary information and protective measures, but, if the risks seem still unclear to you, please seek independent advice.

© 2011-2022 Teletrade-DJ International Consulting Ltd

Teletrade-DJ International Consulting Ltd is registered as a Cyprus Investment Firm (CIF) under registration number HE272810 and is licensed by the Cyprus Securities and Exchange Commission (CySEC) under license number 158/11.

The company operates in accordance with the Markets in Financial Instruments Directive (MiFID).

The content on this website is for information purposes only. All the services and information provided have been obtained from sources deemed to be reliable. Teletrade-DJ International Consulting Ltd ("TeleTrade") and/or any third-party information providers provide the services and information without warranty of any kind. By using this information and services you agree that under no circumstances shall TeleTrade have any liability to any person or entity for any loss or damage in whole or part caused by reliance on such information and services.

TeleTrade cooperates exclusively with regulated financial institutions for the safekeeping of clients' funds. Please see the entire list of banks and payment service providers entrusted with the handling of clients' funds.

Please read our full Terms of Use.

To maximise our visitors' browsing experience, TeleTrade uses cookies in our web services. By continuing to browse this site you agree to our use of cookies.

Teletrade-DJ International Consulting Ltd currently provides its services on a cross-border basis, within EEA states (except Belgium) under the MiFID passporting regime, and in selected 3rd countries. TeleTrade does not provide its services to residents or nationals of the USA.

Material posted here is solely for information purposes and reliance on this may lead to losses. Past performances are not a reliable indicator of future results. Please read our full disclaimer.

CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 72.72% 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.
Choose your language/location