Bloomberg News

Lira Declines in Istanbul After Central Bank Says No Dollar Sale

October 13, 2011

Oct. 13 (Bloomberg) -- Turkey’s lira declined after the central bank did not sell dollars today, heading for the biggest retreat in more than a week against the U.S. currency.

The lira dropped 0.9 percent to 1.8374 per dollar at 5:11 p.m. in Istanbul, trimming its weekly gain to 0.6 percent. The currency has appreciated 2.7 percent since it reached a record low of 1.9096 on Oct. 4 and forced the central bank to raise its dollar sales to a record $750 million. The central bank has sold dollars most days since Aug. 5 when it embarked on daily dollar sales to shore up the currency.

“The lira is depreciating after the announcement,” Tufan Comert, a strategist at Garanti Securities in Istanbul, said in an e-mailed report to investors today. “We can explain the bank’s decision with high risk appetite abroad today.”

The MSCI Emerging Markets Index advanced 0.5 percent to 928.11, gaining for a seventh day, the longest rally since April. Yields on two-year benchmark bonds rose three basis points, or 0.03 percentage point, to 8.36 percent, according to the RBS Istanbul Benchmark Bond Index.

Foreign investor holdings of bonds for the week ending Oct. 7 fell $35 million, paring annual net inflows to $8.9 billion, central bank data showed today.

“It is possible that the central bank did not think an additional intervention is necessary because of foreign flows into the bond market,” Comert said.

The lira is the second worst-performer after South Africa’s rand against the dollar among 31 major currencies tracked by Bloomberg, losing 16 percent this year as the current-account deficit and the European financial woes dented investor confidence in Turkey’s financial stability. The deficit narrowed to $4 billion in August, the smallest gap since October last year.

--Editors: Ana Monteiro, Linda Shen

To contact the reporter on this story: Selcuk Gokoluk in Istanbul at

To contact the editor responsible for this story: Gavin Serkin at

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