- USD/TRY remains firmer around a 3-month high, paring intraday gains lately.
- Turkey and Israel are attempting diplomatic peace for the first time in more than a decade.
- The World Bank has raised concerns about the growth of major oil importers, including Turkey.
- Ukraine and Russia will meet in Ankara on Thursday, markets turn cautious and optimistic as Kiev abandons the NATO plan.
USD/TRY remains in the lead for the seventh straight day around 14.53 ahead of Wednesday’s European session. In doing so, the pair ignores the pullback in the USD amid economic growth fears due to the recent surge in oil prices.
That said, the Turkish Lira (TRY) pair is rising 0.45% intraday at the latest, around the highs last seen on December 20, 2021.
Given Turkey’s status as a major oil importer, recently high energy prices pose a challenge to the economy which is already struggling with inflation. President Recep Tayyip Erdogan’s dominance over monetary policy, as well as aversion to higher rates, also keeps hopes alive for USD/TRY.
In this regard, a World Bank official said on Tuesday that persistent high oil prices caused by Russia’s invasion of Ukraine could reduce the growth of major oil-importing developing economies by one percentage point. such as China, Indonesia, South Africa and Turkey.
Elsewhere, Turkish and Israeli leaders are poised to tame centuries-old animosity as the two leaders meet in Ankara on Wednesday for the first time in more than 10 years.
On a broader front, Ukraine’s withdrawal from NATO membership and the confirmation of the first humanitarian corridor in Kyiv are helping market sentiment. The release of the American prisoner by Venezuela and the American suspicion of easing the sanctions afterwards are also positive for the atmosphere. However, doubts over Kiev’s plans to join the European Union (EU) and Russian pressure to nationalize foreign-owned factories that are closing are challenging market sentiment.
Amid these games, 10-year US Treasury yields fell two basis points (bps) to 1.85% while S&P 500 futures remain firmer at the latest one day.
Looking ahead, USD/TRY traders should pay attention to local politics for immediate directions. However, Thursday’s peace talks between the foreign ministers of Ukraine and Russia, as well as the US consumer price index (CPI) for February, will be more important catalysts to watch.
An upward sloping resistance line from late December around 14.75 at press time may limit USD/TRY’s immediate upside. However, the pair’s buyers remain hopeful until the price drops below the five-week-old support line near 13.70.