USD/TRY plummets to 2-day lows near 4.56 post-CBRT

• The Turkish currency appreciates nearly 3% vs. the greenback today.
• TRY gained ground following a new statement from the CBRT.
• One-Week repo rate will be set at 16.5% from June 1.

The Turkish Lira is posting sharp gains vs. the greenback at the beginning of the week, dragging USD/TRY to the area of daily lows in the 4.5600 area.

USD/TRY lower on CBRT decision

TRY continues to appreciate on Monday, this time gaining around 3% following the latest statement from the Turkish central bank (CBRT).

In fact, the CBRT issued a new statement in order to simplify the operational framework of the domestic monetary policy. In the statement, the CBRT now sees the One-week repo rate as the policy rate for the bank and will be set at 16.5%. In addition, the overnight borrowing/lending rates will be set at 150 bp below/above the One-week repo rate. All these new measures will take effect from June 1.

In the meantime, the pair has dropped to fresh 2-day lows, putting further distance from last week’s all-time highs and moving away from recent overbought levels, all while market participants continue to digest the recent measures.

Therefore, it seems TRY has avoided a deeper crisis for the time being, at least in the very near term, as the CBRT has managed to recover some credibility ahead of the upcoming elections on June 24.

USD/TRY key levels

At the moment the pair is losing 2.80% at 4.5741 and a breach of 4.5375 (low May 22) followed by 4.3908 (21-day sma) and then 4.2197 (low May 10). On the upside, the next hurdle emerges at 4.8032 (high May 24) seconded by 4.9282 (all-time high May 23).