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Lira Becoming Worthless Amid Hiked Turkish CPI: USD/TRY Prediction

  • The USD/TRY exchange rate remained upside following the recent Turkish inflation numbers.
  • The nation’s inflation gained more than 80% last month, following soaring energy prices.
  • Lira continued to be worthless over the last few years.

USD-TRY exchange rate remained stable on Monday, following the Turkish inflation figures. Also, the pair climbed towards the 18.22 high, slightly beneath the 18.41 all-time high. It has gained over 75% from January 2022 lows. Moreover, the lira has dropped over 1,517% from its lowest mark in 2008.

Lira Getting Worthless

The USD-TRY price maintained massive bullishness within the last couple of months. That comes as the Turkish lira becomes more worthless.

Two primary reasons contributed to lira’s crush. First and foremost, the CBRT (Central Bank of the Republish of Turkey) has adopted a massively dovish stance since 2021.

Last year, the leading bank reduced interest rates to 14% from 20%. Moreover, it maintained the dovish stance in 2022. The bank surprised market players in August after slashing interest rates by a staggering 100bp to 13%.

Slashing interest rates meant the banking took an unconventional fiscal policy. Historically, banks hike rates amidst escalated inflation. Data from the Turkish statistics agency showed the nation’s inflation hiked to multi-decade peaks of 80.21%.

This jump was below the 81.22% median estimate. Monthly, the CPI plunged from July’s 2.37% to 1.46%, lower than the 2.0% median estimate.

Additional stats showed the PPI (producer price index) plunged to 143.75% from 144.61%. The PPI declined to 2.41% from 5.17% on MoM (month-on-month).

Thus, analysts trust that Turkish inflation will keep climbing in the upcoming months following CBRT’s massive dovishness. Also, USD-TRY has surged due to the highly strengthened USD.

USD/TRY Prediction

According to the 24hr chart, the USD/TRY exchange rate maintained a massive bullish bias over the last few months. The pair slow a slow pace recently. Meantime, it stays beyond the 25 and 50-day MAs. The Stochastic Oscillator climbed past the 80 overbought regions.

Thus, USD-TRY will maintain upsides due to the continued Fed-CBRT divergence. Such tendencies would see bulls pushing towards the 18.40 all-time high before exploring the resistance zone of 19.

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