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According to Chris Turner at ING, the Central Bank of the Republic of Türkiye (CBRT) has resumed its one-week repo operations, effectively shifting main funding back to the 37% policy rate from the 40% overnight lending rate. This move follows a previous effective 300 basis point tightening and marks a step toward monetary policy normalization in Turkey. This operational shift is significant for currency traders because it provides clarity on the central bank's policy framework while maintaining relatively high yields. By stabilizing effective funding rates, the central bank helps maintain the attractiveness of the Turkish Lira for carry trade strategies, where investors borrow in low-yielding currencies to buy higher-yielding assets. Looking ahead, traders will be closely watching Turkish inflation trajectory and future CBRT policy steps. If inflation shows clear signs of cooling, the central bank may keep rates steady, further solidifying carry trade interest in USD/TRY and EUR/TRY pairs.
