USD/TRY Recovers After Crashing to Fresh Record Low As Turkey Unveils Three-Year Plan

The  Turkish lira is recovering after crashing to  a  fresh record low in  the  middle of  the  trading week. The  lira, which has been one of  the  worst-performing currencies in  2020, has repeatedly recorded all-time lows. Depleted foreign exchange reserves, slumping economic data, and  geopolitical tensions – Ankara is facing pressure on  many fronts, and  this has weighed on  the  lira.

On  Wednesday, Treasury and  Finance Minister Berat Albayrak released details of  Turkey’s New Economic Program (NEP). This is a  three-year economic blueprint and  the  2021 central government to  resuscitate the  economy. The  measures reflect today’s current post-coronavirus conditions, as  well as  the  financial restraints faced by  the  government.
Although the  data has been better than Turkey’s regional trading partners, some of  the  latest figures have been disappointing. This month, officials have reassured the  public that the  worst is behind the  country. The  Medium-Term Financial Plan consists of  total income and  spending estimates until 2023, as  well as  deficit targets and  borrowing status.
Still, Ankara has lots of  work to  do to  improve inflation, employment, growth, exports, and  current account balance for  the  2021-to-2023 period.
On  the  data front, retail sales rose 1.4% in  August, down from the  9.2% surge in  July. At  an  annualized rate, retail sales have advanced 5.8%, down from the  year-over-year growth of  12.5%.
Industrial output did come in  a  better-than-expected spike of  10.4% in  August. Automobile production climbed at  an  annualized pace of  4.3% in  September, down from the  44.3% pop in  August.
The  unemployment rate was unchanged at  13.4% in  July.
The  current account deficit deepened to  -$4.63 billion in  August, slightly worse than the  -$4.6 billion in  the  previous month.
Next week, the  central bank will hold its October policy meeting. Policymakers surprised markets last month by  raising interest rates by  200 basis points, but analysts anticipate that Turkey will keep its benchmark repo rate at  10.25%.
The  lira has also come under a  lot of  pressure on  the  intensifying Armenia-Azerbaijan conflict. Reports are conflicting about Turkey’s involvement so far, but President Recep Tayyip Erdogan has stated that Armenia is a  threat to  peace. The  two nations are engaging in  a  battle over a  disputed border – Nagorno-Karabakh – that has been the  source of  tensions since the  fall of  the  Soviet Union.
The  USD/TRY currency pair fell 0.11% to  7.9135, from an  opening of  7.9217, at  14:06 GMT on  Wednesday. The  EUR/TRY rose 0.21% to  9.3084, from an  opening of  9.3041.
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