TRY Upside Continues

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Our short-term bullish view of the Turkish lira continues to play out. Having first promoted potential upside in late June around the TRY1.5800/US$ area, the currency has appreciated by some 5.8% to its present level of TRY1.4480/US$, in addition to over five weeks of superb carry. With overnight rates trading above 17.50%, and potentially heading a little higher over coming weeks as the central bank acts to cap inflation, the carry is the most attractive in town. Gains of the last few days have been due to dollar weakness, on the back of weak US economic data and the Fed