The Turkish continued its decline against the US dollar on Monday for the second consecutive session, reaching the level of 5.91 pounds.
Last Thursday, the Turkish Central Bank cut its key interest rate by 75 basis points to 11.25%, in its most restrictive move since it began easing monetary policy in July, indicating that any other incentives would be modest due to the recession.
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Turkey’s fifth straight rate cut has pushed real interest rates into negative territory. It is expected that the Central Bank will reduce the pace of mitigation in the coming months.
Given that the annualized inflation rate rose to 11.84% in December, this has narrowed the path to more monetary easing.
After cutting interest rates on Thursday, Fitch Ratings said that the credibility of weak monetary policy and the significant reduction in Turkish real interest rates since last summer still affected the country’s rating of BB-
She added that Turkey still needs significant external financing and its exposure to geopolitical shocks and the risks of sanctions are still major weaknesses.
The government is seeking 5% growth this year, after the economy stagnates annually in three consecutive quarters to mid-2019.
Technically, we are still following the positive hidden deviation on the daily chart and accordingly we indicated in our analysis of the USDTRY pair last week that the rise has a remainder as long as the pair maintains the daily closing above the support level 5.85 pounds.
Continued trading above the level of 5.85 pounds enhances the rise of the US dollar exchange rate against the Turkish lira until 5.93 pounds and the next resistance at 5.98 pounds. Data.net
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