Citi returns to long position in USD/TL

Citi strategists Luis E Costa and Bhumika Gupta said in a note released after the CBRT’s rate hike decision, “We are returning to our long position in our model portfolio.”

The institution suggested a 3-month forward dollar/TL purchase with a target of 30 and a stop loss level of 22.

Strategists envision potential steps to be taken, such as the partial removal of KKM, which could increase demand for dollars.

Citi strategists reported that the risk to their recommendations is regulators’ return to the status quo as the economy reacts to a higher dollar/TL and interest rate shock.

Dollar / TL moved upwards after the CBRT’s interest rate decision

The Central Bank of the Republic of Turkey decided to increase the policy rate from 8.5 percent to 15 percent at the Monetary Policy Committee meeting held on Thursday.

After the interest rate increase, the dollar/TL rate moved upwards and went above the 24.5 level.