Caucasus conflict has provided a fresh fuel for USDTRY rally. Is Turkey on the brink of the currency crisis?
The Turkish lira has been under pressure for a long while. Monetary expansion aimed at restoring growth has backfired and capital outflows led to depleted official reserves. Fearing the worst, the central bank raised rates by 2 percentage points last week but it only paused lira decline.
Caucasus conflict between Azerbaijan and Armenia is the new cause of concern as it may drag Turkey into another unwanted conflict. Geopolitical tensions make for the latest cause of USDTRY surge. The pair is up over 2% just this week and trades at the highest level ever.