Turkish lira falls to the lowest from Aug 2018 as CBRT surprises by 1% rate cut
The pair rose ticks ahead of psychological 7.00 barrier on Wednesday, hitting the highest levels since mid-Aug 2018, when it reached all-time high.
Turkish already passed the levels beyond which there is no return and today’s aggressive action of the Turkish central bank just added to lira’s weak stance.
The CBRT surprised by 1% cut of key interest rate to 8.75% (as most of analysts expected 0.5% easing) in attempts to limit economic damage to the Turkish economy caused by coronavirus crisis.
The central bank risked further weakness of the national currency which depreciated nearly 20% in first four months of 2020, aiming to cushion negative impact from global lockdown that hurt the biggest economy in the Middle-East, which is about to enter recession for the second time in less than two years.
Break of psychological 7.00 barrier is imminent, with all-time high (7.1074) coming in focus, but traders fear that lira could fall further as end of global lockdown is not yet on the horizon.
The pair may enter uncharted territory and eye targets provided by Fibonacci projections at 7.5735 and 7.8619 (123.6% and 138.2% respectively).
Res: 7.0000; 7.1074; 7.2000; 7.3000
Sup: 6.9552; 6.9343; 6.9000; 6.8634