The Turkish lira (TRY) has had a troublesome time this week—no doubt provoked by the alleged manipulation of the Istanbul mayoral election. TRY Sell traders late to the profit party are now wondering if TRY has already hit rock bottom, or if the downtrend will grow into a full-blown crash? With TRY losing ground against the Aussie dollar (AUD) and other popular trading instruments, there may potentially be some serious profit potential over the coming days and weeks. However, FX News recommends you make your own technical and fundamental analysis before investing. Here’s a good starting point.
It started with televised images of street protests in Istanbul after evidence of voter fraud provoke the cancelling of the election. The world media depicted political instability and chaos for the Mediterranean nation, and investors got cold feet within hours of the first media broadcasts.
TRY is well known for volatility in the marketplace and is highly susceptible to economic releases and political events, so the fall came as no surprise to seasoned traders. Given that the world media will surely follow up on this political fiasco over the next few days and weeks, you can expect more negative sentiment to come.
The Turkish Central Bank’s recent raising of interest rates provided little easing for the declining lira in Q1. Instead, the increase angered the Turkish people who—like most of the world—are swimming in debt. When the electoral committee overturned the voting results, all hell broke loose in the capital city, and the chaos spilled onto the foreign exchange in less than a day.
Analysts and TRY traders were already expressing concern about Turkey’s economy because of the long-term decline in foreign currency reserves. Moreover, the central bank’s previous attempts to combat inflation undoubtedly added to the recent loss of confidence in current leadership. With nothing on the horizon that could restore investor confidence, the lira’s future seems anything but bright.
The outlook for Turkey’s credit rating was already running negative due to a lack of external income, lofty international debt, a history of high inflation, and market volatility. And now the recent political upheaval is likely to push the lira down even further. A staged election accusation isn’t the type of news release than happens often, and traders everywhere will undoubtedly have TRY on their radar by now. Of the ten TRY trading pairs, AUD rose to the occasion better than most of the others, and AUD’s long-term strength against TRY makes it one of the stronger options.
Trend traders are likely clicking the AUDTRY Buy button as you read this, while reversal traders will probably prefer to wait for the dust to settle before considering AUD or any other lira derived trading option. Open up your trading platform today and check AUDTRY. As always, make your own analysis before investing, but don’t take too long with this one.
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