USD/TRY Forecast: The Turkish Central Bank Continues Adopting Tighten Monetary Policy Procedures

Signals for the Lira Against the Dollar Today

• Risk 0.50%.

Best Buying Points:

• Open a buy order at 31.75.
• Set a stop loss at 31.55.
• Move the stop loss to the entry point and follow the profit with a price movement of 50 points.
• Close half the contracts at a profit of 70 points and leave the rest until the strong resistance levels at 31.99.

Best Selling Points:

• Place a sell order at 32.00.
• Set a stop loss at 32.05.
• Move the stop loss to the entry point and follow the profit with a price movement of 50 points.
• Close half the contracts at a profit of 70 points and leave the rest until the support levels at 31.80.

Turkish lira Analysis: The USD/TRY pair maintained its gains in early trading on Thursday, trading near its all-time high and looking on track to hit new highs.

The Turkish Central Bank has decided to implement procedures beyond raising interest rates to strengthen monetary tightening policies and address inflation concerns. Exhaustively, those procedures include reducing the monthly growth limits for commercial loans in Turkish lira from 2.5% to 2%, consumer loans from 3% to 2%, and maintaining the 2% limit for car loans. Recently, the inflation in Turkey rose to 67.1% annually and 4.53% in February, boosting expectations of a rate hike in April. JPMorgan expects a 500-basis point increase to 50% in the interest rate.

Simultaneously, investors followed statements by Finance Minister Mehmet Simsek, who stressed the Turkish economic program that focuses on price stability, fiscal discipline, and reducing the current account deficit to achieve balanced growth. This is through structural reforms that aim to enhance efficiency and competitiveness. Clearly, the government has started to tighten monetary and credit policy, along with supportive fiscal policies. Despite the central bank's confidence in its measures, Simsek urged patience.

The ongoing initial phases of the reform program were highlighted, as Turkey aims to address the current account deficit through balanced growth, focusing on its positive demographic structure and entrepreneurial spirit. Minister Şimşek acknowledged the recent improvement in central bank reserves but pointed out pressures due to the depreciation of the lira. He dismissed speculations about the impact of the upcoming local elections and emphasized the importance of adapting monetary policy to current circumstances, surpassing Turkey's credit ratings risks in the market perception.

TRYUSD Technical Analysis and Expectations Today:

TRYUSD rose in early trading on Thursday, trading near its all-time high of 31.85 lira per dollar. The pair is trading in an open path to record further gains. Currently, the price is trading within an upward price channel for the daytime frame, as shown in the chart. Also, the price is moving above the 50 and 200 moving averages, which are positively crossing upwards, on most time frames from four hours to the weekly time frame, indicating buyer dominance. If the pair rises, it will target 31.95 and 32.05 respectively. Contrarily, if the price falls, it will target 31.65 and 31.50 respectively.

Eventually, the forecasts for the Turkish lira suggest that the pair's upward trend is expected to continue, targeting levels around 31.99 lira and each dip represents an opportunity to reinforce buying contracts. Furthermore, we recommend adhering to the mentioned recommendations and maintaining capital management rules.

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