The Turkish lira slumped to a fresh all-time low of 10.9680 against the US dollar before the CBRT decision. Economists at Société Générale expect USD/TRY to continue its march forward to the 11.60 mark.

Turkey CB forecast to cut policy rate by 100bp to 15%

“We are aligned with the consensus for a 100bp cut in the one-week repo rate to 15.0%. The bank is ignoring the challenging inflation backdrop, putting into practice the demand from Erdogan for cheaper borrowing costs.”

“Daily MACD histogram is recording multi-month high which denotes the up move is a bit overstretched. This is not a reversal signal, however, an initial pullback can’t be ruled out.”

“Next projections are located at 11.35 and 11.60. Achievement of these objectives could lead to a pause; 10.22, the 50% retracement of the last bout of rise is near-term support.”