Turkey’s current account deficit came out in line with expectations at about USD4.0bn in August. The deficit was at 5.3bn in July. Compared to August last year, the deficit is up 30% but the important point is that there is a clear slowdown in the pace.
In the previous 3 months, the c/a deficit was widening at a pace over 100%.
This deceleration in the expansion of the deficit is a positive development for the TRY.
Although the lira’s performance was a bit disappointing yesterday given the magnitude of the rally in the global market, we continue to like the TRY.
USD/TRY is facing this important technical support located in 1.82-83 area. A break lower should drive the cross to our ultimate target of 1.70.
HSBC Global Research