President Erdogan of Turkey returned to a familiar philosophical place over the weekend, when he decided he was no longer enthused with the work of his appointed leader at the Central Bank of Turkey. Naci Agbal was relieved of his working duties this weekend when he was shown the exit door by President Erdogan. This is the third time in less than two years the head of the Turkish central bank has been changed.
The USD/TRY spiked higher in early trading today and slammed through the 8.0000 ratio before things within Forex returned to slightly more tranquil waters and receded from highs. However, speculators who want to venture forth within the USD/TRY are urged to use caution because the Turkish lira could provide additional fireworks short term as financial institutions come to grips with the change in power at the Central Bank of Turkey today and tomorrow.
To put it bluntly, President Erdogan’s fiscal viewpoints do not match those of many leading economists. The change of authority at the central bank will not be welcomed by financial institutions, particularly if the newly appointed leader just becomes a mouthpiece for President Erdogan instead of trying to formulate a mandate which is based on solid economic principles.
Interestingly enough, the USD/TRY has been rather tame since the beginning of November. The USD/TRY was trading at a high of around 8.50000 on the 6th of November 2020 and reached a value of nearly 6.90000 in the middle of February. However, since reaching these lows, the USD/TRY has begun to incrementally experience another bullish trend. Before this weekend’s crisis, the USD/TRY was trading near 7.80000 on the 9th of March before reversing lower.
Traders should continue to expect a fast market and turbulent conditions. If speculators are brave enough to traverse the waters of the USD/TRY, they are strongly advised to use limit orders to protect against nonsensical price fills which could prove dangerous. If a trader feels inclined to participate and wager on the USD/TRY, they may want to consider being a buyer on dips in the market which test short-term support levels. The USD/TRY resistance level of 8.00000 may get a sincere test near term if the crisis within the Central Bank of Turkey doesn’t fade away soon.
Turkish Lira Short-Term Outlook:
Current Resistance: 7.99000
Current Support: 7.64000
High Target: 8.27000
Low Target: 7.45000
