USD/TRY JUMPS PAST 24.00 TO CLINCH NEW ALL-TIME HIGH

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  • USD/TRY trespasses the 24.00 hurdle followed the CBRT hike.
  • Markets perceives as insufficient the CBRT rate raise.
  • The central bank hiked rates by 650 bps to 15.00%.

It is never enough for the Turkish lira, is it not?

On Thursday, the Turkish lira experienced a significant decline, reaching record lows against the US dollar and pushing USD/TRY well above the 24.00 level.

USD/TRY ignores CBRT rate hike

The Turkish currency's depreciation gained further momentum as the rate hike fell short of market participants' expectations. The CBRT raised the One-Week Repo Rate by 650 basis points to 15.00% during its event.

It is important to note that there was a consensus among analysts that the first rate hike since August 2021 would be around 20%, especially after President Erdogan appointed M. Simsek as the Finance Minister and H. Erkan as the CBRT Governor following the May 28 elections.

The central bank's objective with this move was to initiate the process of monetary tightening, establish a trajectory towards lower inflation, stabilize inflation expectations, and manage pricing behavior.

The CBRT reaffirmed its commitment to the 5% inflation target and did not rule out the possibility of implementing additional measures for monetary tightening to achieve this target.

Moreover, the lira faced additional selling pressure as domestic banks ceased interventions aimed at supporting the struggling currency


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