Bloomberg News

Turkish Lira Falls for 7th Day as Opposition Boycotts Parliament

June 28, 2011

June 28 (Bloomberg) -- The lira weakened for a seventh day after members of the main opposition party refused to take their oaths in parliament to protest a ruling that bars two of their colleagues from joining the assembly in Ankara.

The currency depreciated as much as 0.6 percent to 1.6472 per dollar in its longest losing streak since November. It pared the loss to 0.3 percent, trading at 1.6415 as of 6:17 p.m. in Istanbul, on speculation the stalemate would be broken. The yield on benchmark two-year bonds rose one basis point, or 0.01 percentage point, to 9.18 percent, according to the TEB Local Benchmark Bond Index.

Prime Minister Recep Tayyip Erdogan said he would evaluate and discuss any opposition proposals for changes to the penal code. Erdogan made the comment to reporters in Ankara after the main opposition Republican People’s Party, or CHP, said it intends to put forward amendments to the legislation in a bid to allow two of its members who are in jail to join the assembly.

“First reaction of the market was negative because of the rising political uncertainty,” Ozgur Altug, chief economist at BGC Partners in Istanbul, wrote in a note to clients. “However, there are some signs that CHP,” the Nationalist Action Party, or MHP, and the ruling Justice and Development Party “could take some steps to solve the problem,” he wrote.

All but one of the 135 members of the Republican People’s Party’s bloc is refusing to take oaths of office in protest at a court’s refusal to release from jail two party members who were elected in a June 12 general election. Earlier, 35 independent deputies backed by the pro-Kurdish Peace and Democracy Party, or BDP, said they would boycott the 550-seat parliament.

Prime Minister Recep Tayyip Erdogan’s Justice and Development Party secured a third term with 50 percent of the vote in the June 12 elections.

“We have been saying that there will be political stability in Turkey but now suspicions have emerged about this,” Tufan Comert, a strategist at Garanti Securities, said in e-mailed comments.

The ISE National 100 Index added 1.4 percent to 62,819.08, closing at its highest in two weeks.

--Editors: John Kohut, Peter Branton.

To contact the reporter on this story: Selcuk Gokoluk in Istanbul at sgokoluk@bloomberg.net

To contact the editor responsible for this story: Gavin Serkin at gserkin@bloomberg.net


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