Negative Development For Try

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Negative Development For Try

Another Negative Development For Lira (Try)

Nothing seems to be working for the Turkish Lira (LRY) as it continues on a long-term downward path. The USD/TRY continues to rise higher, making things difficult for the Lira.

According to Commerzbank, the depreciation of the Lira is a lot worse against the non-USD currencies. The annual depreciation rate of the Lira is around 4.3%, which is quite a lot.

Try Weaker Against The Us Dollar

Also, the recent rebound in the US Dollar against major currencies has also found its way into the USD/TRY. That's why the TRY has once again resumed its downtrend against the greenback.

The recently released trade data has also spelled bad news for the Lira. The data showed that the external trade deficit of Turkey continues to widen with no end in sight. It has now reached $8.2 billion, the third jump in a row.

Meanwhile, the imports have increased during the same period, with a decline in the exports. Also, the income from tourism will decline now that the summer holidays are coming to an end.

This data also showed that the export sector has delivered one of its worst performances on a y/y basis. Commerzbank added that the trade imbalance of Turkey comes from the strong domestic demand.

At times like this, anyone can question whether the CBT's initiative to rebalance the economy and adopt a tight monetary stance is really working or not.

In addition, the balance of payments indicators also show a decline over the last few months. This would make things difficult for the Turkey as it can't just sustain such a huge trade deficit without sufficient FX reserves.

With all things combined, things are not looking good for the Turkish Lira during the next 5-6 months. But once the US Federal Reserve starts to cut rates again, things might turn around for the Turkish Lira.

However, it still remains to be a question of if as the Federal Reserve is still hesitant to lower the rates.

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