The USD/TRY exchange rate has recently shown significant upward momentum, with the pair trading at 90-day highs near 42.45, which is 1.7% above its three-month average of 41.74. Analysts indicate that this range reflects a stable trading environment, bouncing between 40.99 and 42.45 with only a 3.6% fluctuation.
The outlook for the US dollar (USD) remains clouded as recent dovish sentiments surrounding Federal Reserve interest rate adjustments suggest a heightened probability of a rate cut in December, reaching as high as 75%. Factors such as the anticipation of US retail sales data could further pressure the dollar if results indicate slowing growth in consumer spending. Additionally, external factors—like optimism stemming from ongoing Ukraine-Russia peace talks—are also weighing on USD demand.
On the Turkish side, the Turkish lira (TRY) faces its challenges. The central bank has recently adjusted its inflation targets, now expecting an increase in inflation to a range of 31-33% for 2025. In response to rising inflation, which saw an unexpected jump to 33.29% in September, the bank has moderated its monetary policy easing, cutting the interest rate by 100 basis points only recently. Market experts suggest that this combination of high inflation and uncertainty in policy measures could exacerbate volatility for the lira.
Political unrest in Turkey also remains a critical factor affecting the TRY's stability, highlighted by recent protests that have led to significant depreciation of the currency against the dollar. Economists point out that ongoing political tensions and inflationary pressures could maintain a bearish outlook for the lira in the near term.
In summary, while the USD appears pressured by changing expectations from the Federal Reserve and geopolitics, the TRY is influenced by domestic inflation challenges and political instability. Market participants should stay vigilant as these dynamics evolve, facilitating better decision making for international transactions.
