The USD to TRY exchange rate remains influenced by several key factors shaping the outlook for both currencies. Recently, the US dollar experienced appreciation, driven by a hawkish shift in Federal Reserve interest rate expectations. Following the Fed's recent decision to cut rates, statements from Fed Chair Jerome Powell suggested that further cuts are not guaranteed, hinting at potential supportive measures for the USD. Analysts will be closely watching upcoming speeches from Fed officials as any consensus towards a hawkish tone could further elevate the dollar.
On the other hand, the Turkish lira faces significant challenges. The termination of Turkey's foreign exchange-protected deposit scheme has introduced uncertainty, with the scheme previously costing approximately $60 billion. Economic forecasts have seen adjustments, with the European Bank for Reconstruction and Development raising Turkey's GDP growth outlook to 3.1%. However, this optimism is tempered by soaring inflation, which spiked to 33.3% in September, complicating the central bank's monetary policy approach.
Recent data shows the USD to TRY rate has reached 90-day highs near 42.06, which is 1.6% above its three-month average of 41.36. This reflects a stable trading range of 3.6% over the past months, circulating between 40.61 and 42.06. Such movements underscore the vulnerabilities of the Turkish lira against a backdrop of persistent inflation and broader geopolitical risks, while the US dollar gains momentum amid potential shifts in interest rate policies.
Overall, the interplay between these factors suggests that while the USD may maintain its strength, the TRY could continue to face downward pressure unless significant economic reforms are implemented and inflation is effectively controlled. Euro-zone developments and global market dynamics are also poised to create volatility in this currency pair.
