FXStreet: USD/TRY ignores Turkish President Erdogan to keep Fed-led gains near $13.50

USD/TRY picks up bids to $13.60, reversing the early Asian pullback on Thursday, as market players cheer the US Federal Reserve’s (Fed) hawkish play.

19:00 hours Turkish time—dollar/TL @13.63-4

In doing so, the Turkish lira (TRY) currency pair ignores comments from President Recep Tayyip Erdogan who “Urges Turks to borrow after unorthodox rate cuts”, per Reuters.

During an interview with NTV, Turkish President Erdogan signaled further steps to relieve the burden of inflation while promising new alternative debt issuance for investors. The national leader reiterated his dislike for higher interest rates while saying, “High-interest rate environment creates a fragile situation.” Additionally, Erdogan also said, per Reuters, that loans will be used to increase production while also showing confidence in the new economic model that will ensure Turkey will be less impacted by speculative moves.

WATCH: Turkey’s Coming Debt Trap | Real Turkey
On the other hand, the US Federal Reserve (Fed) matched wide market expectations to keep benchmark interest rates and tapering targets intact during Wednesday’s Federal Open Market Committee (FOMC) meeting. However, the interesting part from the Monetary Policy Statement was, “The Committee expects it will soon be appropriate to raise the target range for the federal funds rate.”

Fed Chairman Jerome Powell also spoke in sync with the hawkish signals from the US central bank while saying, “There’s plenty of room to raise rates.” Though, his comments like, “The rate-hike path would depend on incoming data and noted that it is ‘impossible’ to predict,” were taken with a pinch of salt.

Amid these plays, US equities and commodities remained on the back foot, except for oil, whereas the US 10-year Treasury yields rose the most in three weeks, up eight basis points (bps) to 1.87% by the end of Wednesday’s North American session. That said, the US T-bond yields stay firmer around 1.85% while the S&P 500 Futures drop 0.65% by the press time.

Looking forward, comments from Turkey and geopolitical tension surrounding Russia and China may entertain USD/TRY traders. However, major attention will be given to the first readings of the US Q4 GDP and Durable Goods Orders for December. Additionally, ahead of the Turkish Central Bank’s (CBRT) quarterly inflation report release, Bloomberg said, “Turkey’s central bank is set to raise its inflation forecast Thursday after a collapse in the currency pushed consumer price growth to its highest in President Recep Tayyip Erdogan’s 19-year rule.”

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Published By: Atilla Yeşilada

GlobalSource Partners’ Turkey Country Analyst Atilla Yesilada is the country’s leading political analyst and commentator. He is known throughout the finance and political science world for his thorough and outspoken coverage of Turkey’s political and financial developments. In addition to his extensive writing schedule, he is often called upon to provide his political expertise on major radio and television channels. Based in Istanbul, Atilla is co-founder of the information platform Istanbul Analytics and is one of GlobalSource’s local partners in Turkey. In addition to his consulting work and speaking engagements throughout the US, Europe and the Middle East, he writes regular columns for Turkey’s leading financial websites VATAN and www.paraanaliz.com and has contributed to the financial daily Referans and the liberal daily Radikal.