Stable Outlook But Risks Remain

The Turkish lira is currently testing a key short-term support level between TRY1.2000-1.22000/US$, a firm breach of which would set the stage for a move back to TRY1.2700/US$. That said, positive domestic conditions including high interest rates and an improved political outlook stemming from the recent court decision not to ban the governing Justice and Development Party gives us reason to be sanguine. A bounce off this point would suggest appreciation back to key resistance at TRY1.1400/US$.

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