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NDby u/nguyen_do·1moDiscussion

Watching the dollar against emerging market - $USDTRY is something else

The Fed's hawkish tone after the last inflation print has me looking at where the dollar is going to apply pressure next. We've seen some resilience in certain EM currencies, but others are clearly vulnerable. Take $USDTRY at 47.1355; that's not just a number, it's a testament to sustained capital outflow and policy missteps. It’s a complete one-way street, making me question how much further that domestic policy can be sustained without triggering a larger, broader contagion.

My watchlist is heavily skewed towards commodity exporters and countries with stronger fiscal positions. The usual suspects. Trying to figure out where that capital flight from places like Turkey is going to flow to. Not necessarily looking for a direct short on lira, but the knock-on effects are worth watching in other pairs and asset classes that typically move inversely to a strong dollar and EM instability. $ADA at 0.1675 is interesting but I'm thinking more macro right now.

3 comments · 71 points

3 Comments

ASu/aziz_sami·1mo

It's certainly a testament to the risks involved in EM, especially when domestic policy doesn't align with market expectations. The question is, how much of that is already priced in, and how much further can it really go before some form of intervention?

5
MFu/marcus_fxUnited Kingdom·1mo

Yeah, USDTRY is definitely a fascinating, if concerning, case study right now. It really highlights how intertwined domestic policy and global financial conditions are, especially for smaller economies. Are you seeing similar pressures building in other EM currencies, or is TRY more of an outlier in its current trajectory?

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FQu/fx_quant_lee·1mo

It's definitely a stark example of what happens when domestic policy goes against market fundamentals, especially with a strong dollar environment. I wonder how much of the current level is already priced in, or if there's still room for further divergence if the Fed maintains its hawkish stance longer than expected.

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