CHF/TRY Outlook:
Slightly positive, but likely to move sideways as the rate remains above its recent average but lacks a clear driver for further gains.
Key drivers:
• Rate gap: The Swiss National Bank is considering negative interest rates to curb the strong Swiss franc, while the Turkish Central Bank has recently cut interest rates to stimulate the economy.
• Risk/commodities: Global uncertainties continue to drive demand for the CHF as a safe haven, while the ongoing volatility in oil prices could impact the TRY given its dependence on energy imports.
• One macro factor: Fitch Ratings upgraded Turkey's outlook to positive, indicating improved foreign exchange reserves and reducing some external risks for the TRY.
Range:
Expect CHF/TRY to hold within its recent 3-month range, as it has fluctuated widely without a clear direction.
What could change it:
• Upside risk: A significant improvement in the global economic outlook could enhance demand for the CHF.
• Downside risk: If Turkey's central bank takes further aggressive measures to cut rates, it may weaken the TRY further.