USD/TRY challenges 4-week lows near 6.00 on hawkish CBRT

• TRY reverts initial losses and appreciates to the 6.00 handle vs. the buck.
• The pair tumbles to fresh lows following the CBRT decision on rates.
• The Turkish central bank raised the key rate to 24% from 17.75%.

The CBRT has delivered. USD/TRY now tests the area of fresh multi-day lows near the critical support at 6.00 the figure in the wake of the CBRT monetary policy meeting.

USD/TRY lower on CBRT

TRY quickly faded the initial weakness and forced the pair to test the vicinity of the key support at the 6.00 handle after the Turkish central bank (CBRT) raised the One-week repo rate to 24% from 17.75%, surpassing market expectations.

In addition, the CBRT noted that price stability faces renewed risks stemming from the exchange rate and that this could morph into higher inflation outlook, therefore the decision to raise rates and to keep the tight monetary conditions for the time being.

Spot has thus left behind previous comments from President Erdogan, who once again advocated a loose monetary policy, namely lower interest rates.

USD/TRY key levels

At the moment the pair is losing 3.11% at 6.1452 and a breach of 6.0151 (low Sep.13) would open the door to 5.9629 (Low Aug.26) and then 5.6675 (low Aug.16). On the flip side, the next hurdle emerges at 6.5100 (10-day SMA) seconded by 6.5582 (high Sep.13) and finally 7.2393 (all time high Aug.13).