Turkey’s lira may test lows for the year due to accelerating inflation, bearish technicals and the loss of central bank independence, said Slobodan Drvenica, research manager at currency and derivatives trading specialists Windsor Brokers.
The Turkish central bank lacks the ability to adopt conventional measures to tackle inflation because governors who have raised interest rates have been quickly dismissed, Drvenica said in comments published by currency analysis website FX Street on Wednesday.
Turkey’s central bank left interest rates unchanged last month even after inflation accelerated and the lira weakened. Turkish President Recep Tayyip Erdoğan sacked and replaced the bank’s governor in March after he raised interest rates to 19 percent from 17 percent. Inflation climbed to 17.1 percent last month from 16.2 percent.
A year low for the lira of 8.5015 per dollar is in focus, followed by a record low of 8.5816 reached in November, Drvenica said. Any further losses could see it drop to projected targets at 8.9796 and 9.2258 per dollar ahead of a psychological level of 10 per dollar, he said.
The lira was trading down 0.3 percent at 8.34 per dollar in Istanbul on Wednesday.
Technical resistance to gains for the currency exists at 8.2158 per dollar and 8.1836 per dollar, Drvenica said.
The central bank’s monetary policy committee is due to meet on interest rates on Thursday.