Cross Euro (EUR) and (TRY) is a non-standard tool for trading. Nevertheless, the currency pair is quite interesting, because the tool allows you to trade in two planes at once: on the unstable economy of the EU and the developing market of the Arab countries.
The Eurozone includes more than 20 countries, but the core of the economic base is Germany, France, Italy. It depends on the indicators of these states what rate the European Central Bank will announce.
Lowering or raising the current rate, in turn, directly affects the euro. This is the main factor that traders should consider. With Turkey, everything is much more complicated.
The economic and social development indicators of the country since 2000 have been impressive, which has led to an increase in employment and income, and makes Turkey a country with a standard of living above average.
However, increasing economic vulnerability and more complex external conditions threaten to undermine these gains.
Turkey maintains a long-term focus on implementing ambitious reforms in many areas, and government programs target vulnerable groups and disadvantaged regions.
Poverty levels more than halved in 2002–15, and extreme poverty declined even faster. During this time, Turkey was significantly urbanized, supported a solid foundation of macroeconomic and fiscal policies.
Opened to foreign trade and finance, harmonized many laws and regulations with European Union standards and significantly expanded access to public services. The country quickly recovered from the global crisis of 2008/09.
Turkey’s response to an influx of approximately 3.6 million Syrian refugees is exemplary and sets an example for other countries hosting refugees.
However, overheating in the economy since 2017, coupled with tightening global financial conditions, has led to a stagflationary environment and an excessive growth of debt, which, if not resolved effectively, can drown out growth prospects in the medium term.
This circumstance led to the collapse of the lira and made the trading of the EUR/TRY pair quite interesting since behind all the achievements that Turkey has achieved, the bulk of GDP is income from trade in consumer goods and light industry products.
EUR/TRY trade is high-risk. This trader must understand immediately and build his strategy as accurately as possible. According to data for five years, the lira weakened continuously against the euro.
Starting at 2.88 TRY for 1 EUR in October 2015, a peak of 7.60 TRY for 1 EUR was reached in August 2018. Then the rate fell to 6.65, TRY for 1 EUR and continued to decline throughout 2019.
This directly indicates that the lyre is recovering from economic and political reforms, some of which turned out to be frankly failed.
Also, the fall of the lira is due to the export schedule. In 2015-2016, the indicator fell sharply, which ultimately led to a depreciation.
According to the report of the Ministry of Economy, for 2018, 23% of Turkey’s GDP is made up of textile exports. Other significant factors are trade-in transport and metals. The country cooperates more with Arab partners.
This is not the most obvious point; the lira is tied to the price of oil. Qatar, Oman, the UAE depend on the commodity market. If oil falls in price, these states reduce imports, respectively, Turkey’s commodity turnover falls, which leads to an increase in the trade deficit and a decrease in GDP.
Accordingly, for successful trading, it is enough to understand well what the high-profile political statements of the Turkish government can lead to and how the oil market is set up. Together, these are the most important economic factors.
In the short term, the EUR/TRY cross is not the most interesting. The trading corridor on charts 1 and five days rarely exceeds 100 points. An exception is the release of important financial news.
If we consider the monthly fluctuations, the corridor is 350-500 points, which is quite acceptable for getting a right margin and trading with stop-loss.
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