The USD to TRY exchange rate has recently seen significant fluctuations, influenced by both domestic and international developments affecting the US dollar and the Turkish lira. The USD has struggled with heightened uncertainty following a government shutdown and concerns regarding domestic employment, with recent labor data reflecting a surprise decline in job numbers. Analysts note that with the upcoming release of the ISM services PMI, a strong performance in the service sector could provide some support for the USD, but overall sentiment remains cautious.
Amidst these USD challenges, key factors affecting its outlook include potential shifts in Federal Reserve leadership and forthcoming inflation data which could influence interest rate decisions. Additionally, the context of rising global dedollarization trends and evolving U.S.-China trade relations further complicates the USD’s trajectory. Market participants are particularly attentive to how these macroeconomic factors might impact the currency's value.
On the Turkish side, the lira faces pressure from high inflation rates, projected to rise by 2.6% month-on-month, leading to an annual inflation rate of approximately 32.5%. The recent currency swap agreement between Turkey and the UAE may enhance liquidity and support the lira, which, however, is navigating some structural challenges including heightened taxes on short-term deposits and the end of the FX-protected deposit scheme.
Current market data places the USD to TRY exchange rate at 90-day highs around 41.71, exceeding its 3-month average of 40.94 by 1.9%. The rate has traded within a relatively stable range of 4.3% over the past few months, from 39.99 to 41.71. Given these dynamics, currency analysts suggest that businesses and individuals should remain vigilant about potential volatility as both currencies react to ongoing economic pressures and policy shifts.
