Turkish lira bounces from new all-time low as cabinet meets about the decision to expel 10 Western ambassadors
The USDTRY opened with a gap-higher on Monday and rose to new record high (9.8314) following the new political storm after President Erdogan ordered the expulsion of ambassadors from the US and nine Western countries over the weekend.
Fresh political uncertainty, combined with growing fears over possible fallout for foreign investments and unease over the CBRT’s latest surprise decision to cut interest rates by 2% increased pressure on lira.
Turkish currency regained ground and rose over 200 pips vs the US dollar on Monday, on fresh optimism as the cabinet meets today and will decide whether to proceed with president’s instruction that could be the deepest political conflict with the West in Erdogan’s 19 years on power.
Markets await the release of the statement of the cabinet meeting, due later today, with fresh lira’s weakness seen in case the Turkish foreign ministry precedes with expulsion.
Conversely, lira may gain further traction if expulsion is averted, but unlikely to make a significant progress as fundamentals remain overall negative for lira.
Rising daily Tenkan-sen offers solid support at 9.42 zone which should hold dips, while drop through rising daily Kijun-sen (9.2050) would sideline bulls and allow for deeper correction from new all-time high.
Res: 9.8314; 9.8700; 9.9000; 10.0000
Sup: 9.5000; 9.4200; 9.2965; 9.2050