The Turkish lira sees its strongest form in two weeks as investors wait for the central bank’s decision. The TRY forces the USD slightly lower in the trading sessions this Wednesday, allowing bears to take a breather.
However, the newfound strength of the lira still wasn’t enough to take down the bloc’s single currency.
The tensions between Turkey and other nations, particularly with Greece, still heavily weighs on the lira.
As of press time, the USD/YTRY exchange rate slipped by -0.17% or -0.0133 points in the trading sessions. The prices of the pair fluctuated between 7.8185 and 7.8806 today as investors take advantage of the greenback’s weakness.
Looking at the bigger picture, it seems that the buck’s weaker stance greatly helped the bearish investors recover their losses. Meaning, the Turkish lira doesn’t have enough strength to do it on its own if the dollar is healthy.
Meanwhile, the EUR/TRY trading pair is seen inching higher by about +0.18% or +0.0168 points in the foreign exchange market. The pair’s prices have seen ranges between 9.2737 and 9.3367 in the trading sessions.
Tomorrow, we are expecting Turkey’s central bank to announce its interest rate decisions, fueling the hopes for the lira. However, if things don’t go out the way the market anticipated, things could go south for the lira.
The bank is projected to ramp up its one-week repo rate from 10.25% to 12.00% to slow down the country’s inflation.
Lira’s Fundamentals
Aside from technical factors that control the direction of the Turkish lira, there are also fundamental factors to take into consideration. Turkey’s geopolitical rift with Greece has helped weakened the lira significantly.
Just recently, Greece reportedly started to expand its border wall along its frontier with Turkey to prevent migrants from entering. The move aims to deter the people from trying to enter Europe after an intense border standoff earlier this year.
construction of additional 16 miles of wall is in discussion next to the 6-mile fence along the Evros River, according to Stelios Petsas, a Greek government spokesperson. The river is the official mark that separates Turkish territories from Greek land.
The project will reportedly cost Greece around 63 million Euros and it will add a 5-meter-high fencing. Aside from that, it will also cover the upgrades needed for the existing sections of the wall.
Petsas said that workers would be using galvanized square steel tubes and concrete foundations for the project. According to the spokesperson, they expect to finish by April 2020.
It can be recalled that earlier this year, the Turkish government said that it would stop preventing migrants from crossing into Europe. This led to thousands of people flocking to seek refuge to the European nations, including Greece.
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