Turkish lira approaches a record low vs dollar, weighed by several factors
The USDTRY is approaching an-all time high at 18.3387 as steady advance is on track to fully retrace 18.3387/10.2017 pullback, seen in December.
Despite weakening across the board in past few days, due to renewed risk appetite and profit-takin, the US dollar keeps firm tone against beleaguered Turkish lira, pressured by extremely high Turkey’s inflation, which stands around 70%, with additional pressure provided by continuous widening of current account deficit.
The C/A deficit widened by $4.01 billion in July vs forecasted gap of $3.6 billion, with more important fact that account deficit widened more every month this year.
Turkish lira may see some relief if US inflation falls further in August that would make the dollar less attractive, due to possible easing in rate hike size due to improved conditions, though potential recovery is likely to be limited, as lira remains under increased pressure from a number of internal factors (widening C/A gap; CBRT easing its policy despite a record high inflation).
Eventual break of a record high would expose psychological 20.00 barrier and Fibonacci projection (123.6%) at 20.2590 in extension.
Res: 18.2649; 18.3387; 19.0000; 20.0000
Sup: 18.1638; 18.1258; 18.0515; 18.0020