USD/TRY: Put value has hit lowest since July 3 ahead of the CBRT rate decision

• Risk reversals dropped to the lowest since July 3 Tuesday, courtesy of a sharp drop in demand for TRY put options (bearish bets).
• CBRT (Turkey's central bank) is expected to keep interest rates unchanged on Thursday.

The USD/TRY one-month 25 delta risk reversals (TRY1MRR) fell to 2.083 today, the lowest level since July 3, indicating the value of cheap out of the money TRY puts is at the lowest level in close to three months.

The value of put options had risen to a record high of 10.15 during the height of the lira crisis in early September.

The sharp slide in the value of put options indicates that confidence in TRY has likely been restored. After all, the central bank had delivered a loaded hike of 625 basis points in September, possibly easing investor concern over Erdogan's influence on monetary policy.

Turkey's central bank is likely to keep rates unchanged at 24 percent this week.

TRY1MRR