EUR-TRY Trading

EURTRY is the ticker symbol for the euro and Turkish lira exchange rate. EURTRY is an exotic currency pair because one of its constituent currencies is that of an emerging nation, Turkey. Exotic currency pairs typically feature low trading volumes, overall illiquidity and are traded with relatively higher spreads than major currency pairs.

In the EUR to TRY Forex rate, the EUR is the base currency, while the TRY is the quote currency. As such, the price of the euro to Turkish lira at any given time represents the amount of Turkish lira it would take to exchange for one unit of the euro (1 EUR TRY).

History of EURTRY

EUR/TRY is an interesting pair because it consists of two European currencies with unique and contrasting histories. Only introduced in 1999, the euro is one of the youngest currencies in the world. It is the official currency of the Eurozone, a monetary union of 19 member states within the European Union. The idea of a common currency in Europe became increasingly important in the aftermath of World War II. There were both political and economic motivations: a single currency would facilitate trade within the continent and thus promote peace because of interdependence; it was also important to minimize the influence of the US dollar in European and global trade. But it was not until the signing of the Maastricht Treaty in 1992 that the common currency was discussed with increasing urgency. It was voluntary to join the Eurozone, but there were countries that voiced some concerns. In particular, the UK was the biggest critic, and the nation has since even exited the European Union. Still, the euro has largely been a success. The single currency is now the second most used currency in the world, both in circulation and reserve, and the Eurozone is now an influential economic bloc in the world.

On the other hand, the Turkish lira has had a long and chaotic history, just like Turkey. It was introduced in 1844 as the Ottoman lira, in the then Ottoman Empire. The Ottoman lira was replaced by the Turkish lira in 1923 when the Republic of Turkey was formed following the fall of the Ottoman Empire. The Turkish lira was largely stable in its early years, with the new country pegging it to the Pound sterling, French franc, and US dollar during different periods before 1970. In the second half of the 1970s, the lira started facing massive inflationary pressures. The pressure particularly weighed on the currency during the period of 1995-2005 when the lira literally became the least valuable national currency in the world. It was so weak that in 2005 it was replaced by a new lira. The new Lira was worth 1,000,000 units of the old Lira.

EURTRY Historical Price Performance

The EURTRY exchange rate was around 2.00 when the new lira was introduced in 2005. After a long period of stability, inflationary pressures started haunting the lira again. The EURTRY pair started drifting upwards and crossed above 4.00 in early 2017. It then posted a sharp advance in mid-2018 to around 8.00. Central bank intervention in Turkey helped prevent further lira losses, but the currency then suffered in 2020 with the EURTRY hitting highs of above 10.00. Further losses for the lira were then experienced in 2021, with the EURTRY extending its advance and printing an all-time high above 20.00. The pair has since retreated and it trades at around the 15.00-handle as of February 2022.

Major Bodies Influencing the EURTRY

Here are some of the factors to look out for when you engage in EUR/TRY trading:

The European Central Bank (ECB)

The ECB administers and manages the euro. The bank has the most power over the direction of the common currency. ECB releases interest rates and rate statements monthly. Rising rates will tend to prop up the euro, and vice versa. Additionally, the ECB has in recent years been engaging in quantitative easing programs that have massively influenced the value of the euro. The pace of purchases or news on winding down the programs can greatly influence the common currency.

The Central Bank of the Republic of Turkey (CBRT)

The CBRT is the central banking system of Turkey. The bank has in recent years been very active, after adopting a modern inflation-targeting policy regime in 2002. This means that it routinely hikes or cuts interest rates to meet its inflation targets. Rate hikes will typically raise the value of the lira, whereas rate cuts will weigh heavily on the currency.

The Grand National Assembly of Turkey

This is the Parliament of the Republic of Turkey. Turkey is a highly politicized country, and developments in its parliament can impact the Turkish economy as well as its national currency. In particular, Turkey has in recent years pursued an expansionist policy, and this has really pressured its currency. There have also been measures taken to interfere with the independence of the central bank, further pressuring the lira lower.

EURTRY Correlations

Understanding currency pair correlations can help traders identify EUR to TRY trading opportunities as well as implement effective risk management strategies. Positively correlated pairs tend to move in the same direction over time, whereas negatively correlated pairs tend to move in opposite direction over time. The EURTRY pair has positive correlations with pairs such as USDTRY, EURNOK, GBPTRY, and USDNOK. EURTRY negative correlations include NOKJPY, AUDJPY, CHFJPY, and NOKSEK.