USD/TRY: Downside limited to 8.30 even if CBRT stays on hold – Credit Suisse

Economists at Credit Suisse do not see a compelling risk-reward to buying USD/TRY ahead of tomorrow’ CBRT meeting. They think that USD/TRY downside in the short run is limited to around 8.30 even if the central bank stays on hold on Thursday.

Narrowing scope for USD/TRY to fall

“We think that a policy rate cut of 50bps would lead initially to a spike in USD/TRY above its all-time high of 8.80. Still, given the recent rally in USD/TRY we also see a possibility of a drop in USD/TRY to the 8.50-8.55 area in case the central bank remains on hold. Overall, we do not see a compelling risk-reward trade-off in favour of buying USD/TRY ahead of tomorrow’s central bank meeting.”

“Fresh bullish catalyst for the lira will need to emerge to take USD/TRY meaningfully below its recent lows of around 8.30, even if the central bank stays on hold on Thursday, September 23.”