The USD to TRY exchange rate has reached a 90-day high, trading near 39.67, reflecting a 2.7% increase from its three-month average of 38.61. The currency pair has settled within a relatively stable range of 5.0%, oscillating between 37.79 and 39.67 recently. This upward trend in the USD can be attributed to a combination of factors impacting both currencies.
Analysts note that the US dollar experienced temporary bullish momentum following the Federal Reserve's decision to maintain interest rates, which bolstered expectations of continued economic stability. However, this momentum faced headwinds from geopolitical concerns, specifically fears regarding potential US involvement in the Israel-Iran conflict. Such uncertainties typically prompt shifts in risk sentiment, influencing the dollar's performance.
In contrast, the Turkish lira has faced significant pressure amid mounting political unrest following the arrest of Istanbul's mayor, Ekrem İmamoğlu. This unrest has raised investor concerns regarding the stability of Turkey’s governance and economic reforms under President Erdoğan. The lira's depreciation was evident as it recently hit a record low against the dollar, closing down 3.3%, reinforcing doubts about Turkey's economic trajectory.
Forecasters indicate that ongoing geopolitical tensions and domestic political developments in Turkey will likely continue to affect the lira's value. The imposition of tariffs by the US exacerbates the situation, further straining trade relations and adding more pressure on the TRY. As the Federal Reserve's policies evolve, the USD’s position as a safe-haven asset may also attract more investment, offering potential support against both emerging market volatility and specific challenges faced by the Turkish economy.
In summary, the interplay of US monetary policy and Turkey's internal political climate suggests a cautious outlook for the USD/TRY exchange rate in the near term, with traders advised to monitor developments closely given their potential impacts on future movements.