TRY: The more hawkish, the more carry – ING

Source Fxstreet

The main event in the CEE region today is the Central Bank of Turkey meeting, ING's FX analyst Frantisek Taborsky notes.

USD/TRY remains basically unchanged at 38.000

"This will be the first regular meeting since the March sell-off in the TRY market. In the interim meeting in March, the CBT not only raised the upper band of the interest rate corridor (O/N lending rate) to 46% but also turned it into the effective policy rate by tightening TRY liquidity, while keeping the policy rate (1-week repo rate) flat at 42.5%. These developments suggest that the CBT is likely to remain mute today."

"Benign March inflation data, with an improvement in the underlying trend, will also lead the CBT to keep the policy rate unchanged rather than hike it. However, the CBT's daily balance sheet has, in recent days, shown a continuation of the pressure on the net FX position. Therefore, we do not rule out a further adjustment in the upper band. Overall, market expectations show unchanged rates, but the market would probably not be completely surprised if there is some rate tightening today."

"USD/TRY remains basically unchanged at 38.000 since the spike in mid-March. In recent days, however, we have started to see the central bank again allowing the TRY to weaken slightly, but at a slower pace than before, leaving a still fat carry on the table. As we commented here after the March sell-off, we still like the TRY as a carry trade and it is the March move in the currency that gives the central bank the resolve to maintain only slow TRY depreciation and not allow additional inflationary pressures, keeping the currency attractive to investors and pushing against the outflows we have seen since the March move."


Disclaimer: For information purposes only. Past performance is not indicative of future results.
placeholder
Gold price oscillates in a range below one-week top; bullish potential seems intactGold price (XAU/USD) struggles to capitalize on its gains registered over the past two days and oscillates in a narrow range during the Asian session on Wednesday, just below a one-week high touched the previous day.
Author  FXStreet
Yesterday 05: 59
Gold price (XAU/USD) struggles to capitalize on its gains registered over the past two days and oscillates in a narrow range during the Asian session on Wednesday, just below a one-week high touched the previous day.
placeholder
ADP Employment Change projected to show meager US job growth in JuneThe ADP Research Institute is poised to release its June Employment Change report on Wednesday, and it will explore the dynamics of private sector job gains.
Author  FXStreet
22 hours ago
The ADP Research Institute is poised to release its June Employment Change report on Wednesday, and it will explore the dynamics of private sector job gains.
placeholder
Solana (SOL) at Crossroads — Bounce Likely If $142 Remains IntactSOL price is now recovering and might aim for a fresh increase above the $150 zone.
Author  NewsBTC
20 hours ago
SOL price is now recovering and might aim for a fresh increase above the $150 zone.
placeholder
EUR/USD pulls back from highs as investors await further US employment dataThe EUR/USD pair posts moderate losses on Wednesday, trading near 1.1780 at the time of writing.
Author  FXStreet
20 hours ago
The EUR/USD pair posts moderate losses on Wednesday, trading near 1.1780 at the time of writing.
placeholder
Dogecoin Closes June In The Red With 14% Losses, Will July Be Any Better?With the close of June, the Dogecoin price has once again confirmed the bearish trend of the month.
Author  Bitcoinist
20 hours ago
With the close of June, the Dogecoin price has once again confirmed the bearish trend of the month.
Related Instrument
goTop
quote