The CRBT is today expected to hike the one-week policy rate from 8.50% to 20%. The expectation here is that a shift to more orthodox policy (higher rates) will be delivered now that recently re-elected President Erdogan has changed his economic team. 

Dynamics certainly seem to be changing for USD/TRY too. It now seems as though both international investors and local retail see value in the Turkish Lira – or at least do not expect it to depreciate as much as priced into the FX forward curve.

Assuming the CRBT does deliver on the large hike today, expect USD/TRY to stay stable. However, it may not go that much lower given the expectation that local authorities may want to try to rebuild FX reserves into any TRY strength.