USD/TRY gathers strength to near 38.00 amid political turmoil in Turkey

• USD/TRY gains traction to near 37.95 in Tuesday's early European session. 
• The political crisis in Turkey continues to weigh on the TRY. 
• CBRT interventions might help the Turkish Lira from depreciating. 

The USD/TRY pair gathers strength to around 37.95 during the early European session on Tuesday. The Turkish Lira (TRY) weakens against the US Dollar (USD) as political turmoil in Turkey intensified.

The TRY has plunged after President Recep Erdogan arrested Ekrem Imamoglu, one of the country's most high-profile politicians and President Erdogan's key rival, on corruption charges. This move, along with other arrests, has raised fears that Turkey was moving towards outright autocracy. 

On Monday night, large numbers of riot police joined protesters around Istanbul's city hall as they yelled and waved Turkish flags. The Turkish authorities said before late Monday that 1,133 people had been arrested since the protests began.

The upside for USD/TRY might be limited due to the Central Bank of the Republic of Turkey (CBRT) intervention to save the Turkish Lira. The CBRT raised the key overnight lending rate by 200 basis points (bps) to 46% during an emergency meeting last week and spent a record $12 billion defending the currency.

Investors remain concerned over a potential rise in inflation and recession in the United States ahead of US President Donald Trump's reciprocal tariffs. Trump said late Monday that he will announce tariffs on automobile imports in the coming days and indicated that some countries will receive breaks from reciprocal tariffs on April 2. 

Trump added that he planned to proceed with sector-specific tariffs on lumber and semiconductors and repeated his threat to impose duties on pharmaceutical drugs "in the very near future." The uncertainty surrounding Trump's tariff policies and fears of recession might exert some selling pressure on the Greenback against the TRY.