THE DOT - if this turns orange or red be alert

Friday, December 11, 2009

USDTRY - update - entering the faster pace again soon

The bottoming out phase has come to an end as the major factor was the weakness of the Dollar. My mid term target of 2.00 is back on track as the Dollar will be the winning currency in 2010 plus the Turkish Lira will depreciate as it carries no relevant interest anymore to cover the risks involved especially after todays closure of the DTP ( the Kurdish party) tensions in Turkey will rise sharply going forward. Another aspect which might deteriorate Turkey is the fact that the current government supports Syria and Iran in a big switch of its foreign policy. That will bring problems as the UN sanctions against Iran early next year will take a much more aggressive level, which could undermine foreign investments into Turkey or rather force an exodus of foreign investors. I suspect that a hidden agenda is anyway to break up Turkey as the oil rich east close to the Kurdish border was presented by Ms Rice ( secretary) in a famous map for the new Middle East as a sovereign Kurdistan. In any case big tensions are in the pipeline and will weaken the YTL on top of the rising Dollar next year. Although I still assume that at some point early next year we will have a final weakness of the Dollar in general as it should retest the 1.60 against the Euro but that might be over compensated by a TRY weakness per se.

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