Turkish lira reversal and reserve depletion in four charts

  • Lira defense policy triggers 45% rally so far this week and sends TRY volatility to record high

  • Could offer temporary relief, but introduces risk of vicious inflationary spiral if TRY depreciation resumes

  • Rally could be sustained if it’s reversal of prior overshoot, but retain Sell on TRY due to asymmetric downside risk

December 23rd, 2021
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