Bloomberg News

Turkish Yields Drop to Lowest in Week on Lower Reserve Rules

October 06, 2011

Oct. 6 (Bloomberg) -- Turkish bond yields fell to the lowest in a week after the central bank lowered reserve requirements on some lira deposits and securities.

Yields on benchmark two-year debt dropped 17 basis points to 8.37 percent at the 5 p.m. close in Istanbul, Bloomberg data showed. That’s the lowest level since Sept. 29, according to a Turk Ekonomi Bankasi AS index.

The lowered bank reserve requirements will inject 3.2 billion liras ($1.7 billion) of liquidity into the market, according to an e-mailed statement by policy makers in Ankara. The steps are effective as of Oct. 14, it said.

“The bond yields have moved down after the announcement as the central bank is injecting liquidity into the market with this move,” Onur Aydogan, head of fixed-income trading at ING Bank AS, said in e-mailed comments.

The central bank cut yesterday the foreign-currency reserves that banks must deposit against their liabilities yesterday, freeing up $1.3 billion in liquidity in a move to bolster the lira, which depreciated to a record low on Oct. 4.

The extra yield investors demand to hold Turkish dollar bonds rather than U.S. Treasuries narrowed 24 basis points to 347, compared with a 13 basis-point fall for emerging-market debt, JPMorgan Chase & Co. indexes show.

--Editors: Linda Shen, 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: Mark Bentley at mbentley3@bloomberg.net


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