We looked at this cross on June 9 and predicted a continuation higher towards at least 26.76. Well, we are almost there despite the fact that Turkey's central bank raised its leading lending rate to 15% yesterday. The financial markets had anticipated a rate hike, but larger than what was offered and the reaction was as could be expected more weakness in the Turkish Lira. We should expect more rate hikes during the second half of 2023 and it should not come as a surprise if we end 2023 at nearly 30%. However, that will not come without costs and a full-scale recession should be expected at the year end and into 2024. This should continue to hurt TRY and more upside closer to 30.46 should not come as a surprise.

The worse thing that we could see now is President Erdogan stepping in and lower rates as he insisted several times before. This policy could evolve into a hyper-inflation and then USD/TRY at 30.46 would look expensive.