Usdtry Forecast Ing

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Usdtry Forecast Ing

Usd/Try Forecast: A Shift Is Coming In Easing Cycle

USD/TRY didn't react well to the news that the Central Bank of Turkey has slowed down the pace of its rate cuts. This time, the central bank only made a rate cut of 100 bps.

But despite the recent rate cut, the interest rate in Turkey is still 39.5% which is still quite high. But if we look at the last few months, it becomes clear that the pace of rate cuts has slowed down.

Pace Of Rate Cuts Is Slowing Down

few months back, the bank lowered the rates by 250 bps. Similarly, the July rate cut was 300 bps, which clearly shows that the size of rate cuts is reduced gradually.

According to ING, the bank will continue to lower the rates, but the pace is now slowing down. They also added that the higher inflation is one reason why the Turkish central bank is now rethinking its policy. ING also commented on how there are upside risks for inflation in the coming months.

But despite the rate cuts, ING still thinks that the overall situation is unclear. Also, the interest rate difference between the US and TRY is enough, and the bank will need to work on that.

Based on all the factors, J.P. Morgan has set a new target of 41.9850 for the pair. They added that the officials are now trying to slow down the depreciation of the currency.

At the same time, J.P. Morgan thinks that this policy shift will discourage the short-term players. They also stressed how they are still long on TRY against the USD.

So, this is a sign that even J.P. Morgan is bullish on the TRY as they are expecting a big policy shift in the coming months.

Looking ahead, inflation will remain a key driver for the USD/TRY pair. In addition, the domestic politics is also expected to influence the exchange rate of USD/TRY.

The bottom line is that the central bank is now preferring smaller rate cuts. This could be a sign that we might be reaching the end of the rate-cutting cycle.

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