Currency Analysis Report 9/15/19 – The Turkey Lira Is A Wild Card

An emerging market is a country that doesn’t have all the characters of a developed market.  Countries with high levels of per capita income are classified as developed. Countries with low, middle, and upper-middle incomes per capita, relative to incomes in other countries around the globe, are classed as developing, or emerging and Turkey is one of the 20+ emerging markets.

Characteristics of emerging markets are unstable governments, high or low inflation, shaky monetary policies, etc.  When it comes to Turkey, plunging reserves and a lack of economic policy tightening are contributing to the uncertainty in Turkey.  Over the last 12 months foreign investors withdrawn nearly $2 billion from the nation’s lira bond market amid political and economic turbulence.  Turkey is despite and has been slashing interest rates to try to spruce up their economy.

Turkey’s central bank cut its policy rate by 325 basis points to 16.5% on Thursday, delivering its second aggressive policy easing in less than two months as it seeks to boost a recession-hit economy and put last year’s currency crisis behind it.

Thursday’s move means the bank has cut its policy rate by 750 basis points since mid-July. It slashed interest rates by 425 points from 24% seven weeks ago in its first policy change since the depths of the crisis, which tipped the largest economy in the Middle East into recession.

The lira lost some 30% of its value against the dollar last year and inflation soared to a 15-year high above 25%. Inflation has since eased to 15% and is expected to fall briefly to single digits in October thanks to the “base effect” measurement against last year’s spike.


So where is the Lira heading next, lets go to the charts to find out?

Monthly Chart (Curve Timeframe) – monthly supply is at 6.5000 and monthly demand is at 4.5000.

Weekly Chart (Trend Timeframe) – the trend is sideways.

Daily Chart (Entry) – the chart suggests if price makes it back to the daily supply at 6.0350, to short price with a target at the weekly demand at 4.8000.

This post is my personal opinion. I’m not a financial advisor, this isn’t financial advise. Do your own research before making investment decisions.

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