USD/TRY: Light positioning to prevent a move to levels above 9.20 – Credit Suisse

Last week, economists at Credit Suisse marked a relatively wide range for USD/TRY – between 8.60 and 9.20. They stick to this range which reflects a balance between contradictory factors that are in play.

Initiation of a policy rate cutting cycle to limit the extent of selling USD/TRY for carry purposes

“In Turkey, the target range of 8.60-9.20 which we set for USD/TRY last week still looks reasonable to us even though core inflation for September surprised analysts on the upside earlier this week.”

“Our view remains that the central bank’s recent initiation of a policy rate cutting cycle at a time when inflation remains elevated will limit investors’ willingness to sell USD/TRY for carry purposes.” 

“We think that light positioning on the part of international investors will keep USD/TRY upside in check for now and prevent a move to levels above 9.20.”