For all the respite that the Turkish Lira (USDTRY) has had over the last week the flavour of the market feels slightly different today. The decline from the recent high just north of 7.12 has not translated into sufficient downward momentum to convince the markets that the trend has been broken, with evident dollar strength seen this week against a number of currencies. Moreover, the recent counter-measures by the Central Bank to assist FX market stability can only be a temporary measure. The only reason one might have for buying Turkish Lira is to cover existing short positions. It’s bad now, and if history has taught us anything it’s that it’s going to get worse before it gets better. Older hands will recall the Bank of England making similarly lavish promises to maintain the value of Sterling within the ERM, and it hardly needs saying that Turkey is not in the same league. Our feeling at this point is that we are now looking for the springboard level from which to resume the rally and retest both the highs, and the resolve of the Turkish Bank.