By Samir Al Khoury
The Turkish lira continues to depreciate against the US dollar, with the exchange rate reaching a historical record level of 30.6010 lira per dollar today.
Surprisingly, Turkish Central Bank Governor Hafiza Ghaya Arkan resigned after just eight months in office, citing a slanderous media campaign against her and her family. Her deputy, Fatih Karahan, swiftly assumed her position. Karahan expressed his commitment to maintaining a tight monetary policy until inflation decreases.
JP Morgan Chase and Morgan Stanley anticipate that the new governor will adopt a stricter approach compared to his predecessor. They predict a prolonged period of interest rate hikes and proactive measures to combat inflation.
After the monetary policy in Turkey shifted from an unconventional policy to a conventional policy, the Turkish Central Bank raised the interest rate by 36.50%, bringing the interest rate to 45%, after appointing Hafiza Ghaya Arkan as head of the Turkish Central Bank in June 2023.
The Consumer Price Index rose on an annual basis, recording 64.86% in January, which exceeded expectations (64.52%) and the previous reading (64.77%).
From a technical perspective, it seems that the upward trend for the USD/TRY pair will continue into the next phase.
The positive movement index (DMI+) records approximately 24 points, compared to the negative movement index (DMI-), which records approximately 4 points. We note that the gap is rather large between these two indicators, which means that purchasing pressures on the US dollar against the Turkish lira are strong. More importantly, the green ADX trend strength index records about 67 points, which is more than 25 points, and means that the momentum of this upward trend is strong.
Regarding the Relative Strength Index, it has reached overbought levels.
Please note that this analysis is provided for informational purposes only and should not be considered as investment advice.
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