USD/TRY rises to near 40.00, marks fresh highs due to risk-off sentiment

• USD/TRY gains ground amid renewed tariff concerns following the Trump's warning to BRICS allies.
• President Trump threatened to impose an additional 10% tariff on BRICS nations, accusing the group of pursuing anti-American policies.
• The risk-sensitive Turkish Lira weakens amid escalating tensions in the Middle East.

USD/TRY extends its gains for the second consecutive session, trading around 39.98, marking fresh all-time highs, during early European hours on Monday. The pair appreciates as the US Dollar (USD) receives support from risk-off mood, driven by the US President Donald Trump's warning of extra 10% tariff on BRICS nations.

President Trump posted on social media on Monday "Any Country aligning themselves with the Anti-American policies of BRICS, will be charged an ADDITIONAL 10% Tariff. There will be no exceptions to this policy." Additionally, the risk sentiment weakens due to renewed tariff concerns as Trump may send out 12 or 15 letters on tariffs later in the day, with the expectation that trade deals or letters with most nations will be done by July 9.

US Treasury Secretary Scott Bessent said on Sunday that US President Donald Trump will send letters to some trading partners, warning that tariffs could revert to April 2 levels on August 1 if no progress is made on a trade deal. US Commerce Secretary Howard Lutnick noted that Trump is currently finalizing the specific rates and agreements and may send out 12 or 15 letters on tariffs on Monday.

Additionally, the risk-sensitive Turkish Lira (TRY) loses ground due to ongoing conflict in the Middle East. The indirect ceasefire talks in Qatar between Israel and Hamas have concluded without a breakthrough, per BBC report. Israeli killed at least 39 people in Gaza City on Sunday, a day after killing at least 78 Palestinians in attacks across the besieged Strip.

The Central Bank of the Republic of Türkiye has implemented more orthodox monetary policies to curb inflation and rebuild investor confidence. In March 2024, the central bank raised interest rates to 50% and held them steady until December, when it began easing. The policy rate currently stands at 46%. Meanwhile, inflation dropped to 35.05% in June 2025 -- its lowest level since November 2021.