The country of Turkey is struggling with inflation at a 24-year high. Typically central banks would be hiking interest rates to deal with the inflation problem. However, President Erdogan has an unusual policy where he claims that raising interest rates actually causes inflation. The Monetary Policy Committee led by Governor Sahap Kavcioglu lowered its benchmark to 13% on Thursday last week, after keeping it at 14% since December. This sent the TRY sharply lower against the USD. The danger is that this unorthodox policy stance will continue to weigh on the LIRA (TRY) going forward.

It is worth noting that the USDTRY has an exceptional period of strength coming up. Over the last ten years, between August 27 and October 08, the USDTRY pair has risen 9 times for an average return of 3.35%. Will the USDTRY stay strong this year?

Major Trade Risks: The major risk is if Turkey’s central bank changes its policy stance and this can alter the seasonal outlook.

HYCM clients can access the Seasonax product in order to analyse over 25,000 currency pairs, indices, commodities, as well as individual stocks. Please contact your account manager for a free trial. Certain products & services mentioned herein may or may not be available to all clients depending on which HYCM Capital Markets Group entity their trading account(s) adheres to.