CBRT is doing another economical experiment after the recent rate decision. CBRT lowered the interest rate to %18 from %19, despite over %19 inflation, and has said they will keep the rates above the inflation for many months. The last time when the lending rate was lower than the inflation USDTRY surged %47 despite falling the dollar index (%4.20). After that Naci Agbal become the president and USDTRY fall to near 7 but that did not take long. With a surprise decision Agbal taken from the office, USDTRY never stops its increase since. Now that the past experiment is repeated, Another big surge may have already started.

The Spearman correlation indicator, which is working almost perfectly for the last 5 years, has given another buy signal. USDTRY has risen with an average of %36.77 at the last 6 buy signals (1 is a semi buy signal) within less than a year. If the average is reached, That means over 11.50 pricing for USDTRY. It is looking a bit high but a double-digit price is not out of the question in the medium-term unless some drastic change occurs. FED’s start of tapering will not help the Lira as well.