Volatility in USD/TL exchange rate point to a 'bull trap'

Published 17.04.2017 00:41
Updated 17.04.2017 00:42

The dollar-Turkish lira parity rose from TL 3.68 ($1.00) to TL 3.75 ($1.02) in 11 minutes on Friday night. Bankers who said the movement has nothing to do with the referendum, said it is an "operation of tipping the scales in the low volume electronic market."

With the effect of the recently announced referendum polls, a "bull trap" operation was carried out on Friday night in dollars, falling below TL 3.65 on Thursday.

The dollar-Turkish lira exchange rate, which started Friday at TL 3.67, was at around TL 3.68 at midnight when domestic markets were closed. The bankers said that investors tried to predict the outcome of the referendum and position themselves accordingly.

While the last trading day of the week was ending with these comments, there was an unexpected sharp movement in the dollar at midnight. The dollar-Turkish lira parity, which stood at TL 3.68 at 23.48, surged up to TL 3.75 at 23.59. It was also argued whether this sharp move was related to the expectation of the referendum outcome. However, according to the information obtained by the Turkish daily Habertürk, the fact that the dollar-Turkish lira exchange rate rose by 7 kuruş in 11 minutes has nothing to do with the expectation of the referendum outcome.

According to the bankers, the move is entirely a "tipping the scales" operation. Because there is no open market in the world at the time when the dollar-Turkish lira exchange rate was active. The U.S. markets and all markets during that time period were either in holiday or closed. Noting that only electronic markets are open at that time, bankers indicate that the first move in the exchange started at 23.48 on Friday night.

A volume of $10 million

Noting that the volume was around $10 million in the electronic market at 23.50 hours, the bankers pointed out that the sales activated the automatic orders placed between TL 3.72- TL 3.74 in response to the possibility of unexpected results in the referendum and that the exchange rate hit TL 3.75 with the increase in sales.

The bankers said this movement in the market is a complete manipulation in terms of the timing and process, stressing that it damaged too many people.

Pulling the bull trap is to damage the investors by artificially tipping the price of a predetermined investment instrument especially in shallow markets.

Not a basis for Monday morning

Highlighting that the increase in the exchange rate has nothing to do with the referendum, the bankers said the movement will not form a basis for today's morning, but these movements can also be observed today.

Share on Facebook Share on Twitter