USD/TRY Outlook: The outlook is bullish, with the USD trading significantly above its 90-day average and at recent highs, supported by ongoing U.S. economic developments.
Key drivers:
- Rate gap: The Federal Reserve's decision to maintain its interest rate has helped bolster the USD, in contrast to Turkey's recent rate cut aimed at addressing inflation.
- Risk/commodities: Global oil prices remain high, positively impacting the USD and increasing demand for energy, which can influence economic conditions in Turkey.
- One macro factor: Fitch Ratings' revision of Turkey’s outlook to positive is encouraging for the TRY, but may not be enough to offset the pressures of the USD.
Range: Expect the USD/TRY to hold within recent levels, possibly drifting slightly higher as the economic backdrop evolves.
What could change it:
- Upside risk: Strong economic data from the U.S. could drive the USD higher.
- Downside risk: A significant stabilization of Turkey's economy or further currency reform might enhance the TRY's strength.
