USD/TRY climbs to multi-day highs near 14.3000

• USD/TRY advances further and clinches new monthly peaks.
• USD-strength, geopolitics, inflation keep weighing on the lira.
• US Nonfarm Payrolls surprised to the upside.

The Turkish lira remains under pressure and now lifts USD/TRY to new monthly highs near 14.30 at the end of the week.

USD/TRY looks to Russia-Ukraine

USD/TRY advances for the fifth consecutive session so far on Friday, this time recording fresh monthly peaks in the 14.20/30 band against the backdrop of the generalized risk aversion sentiment and upside bias in the US dollar.

In the meantime, the lira remains under the microscope following the increasingly deteriorated geopolitical scenario in combination with the intense rally in commodities – particularly crude oil – and the relentless upside in the greenback, which clocked fresh tops in the levels last seen in late May 2020.

Further selling bias in TRY is seen coming from Thursday’s release of inflation figures in Turkey, where the headline CPI rose nearly 55% in the year to February and almost 5% on a monthly basis. Core prices, in the meantime, rose 44.05% from a year earlier and Producer Prices gained 105.01% over the last twelve months.

What to look for around TRY

Further upside momentum encourages the pair to record new YTD highs past the 14.00 barrier, at the same time leaving behind the 2-month consolidation theme sustained by surprising lira stability. The lira, however, is forecast to remain under scrutiny amidst rampant inflation (and apparently no measures to tackle the issue), negative real interest rates and the omnipresent political pressure to keep the CBRT biased towards low interest rates.

Eminent issues on the back boiler: Progress (or lack of it) of the government’s new scheme oriented to support the lira via protected time deposits. Constant government pressure on the CBRT vs. bank’s credibility/independence. Bouts of geopolitical concerns. Much-needed structural reforms. Earlier Presidential/Parliamentary elections?

USD/TRY key levels

So far, the pair is advancing 1.15% at 14.2569 and a drop below 13.7143 (low Feb.25) would expose 13.5091 (low Feb.18) and finally 12.4317 (low Feb.11). On the other hand, the next up barrier lines up at 14.6052 (2022 high Feb.24) seconded by 18.2582 (all-time high Dec.20).