Bloomberg News

Turkey’s Lira Gains on Anticipation of Bank Liquidity Steps

October 24, 2011

Oct. 24 (Bloomberg) -- Turkey’s lira strengthened against the dollar for the third day on anticipation the central bank will reduce the amount of liquidity it provides to the market.

The lira was 0.5 percent higher, at 1.8238 per dollar, at 9:48 a.m. in Istanbul, the strongest level since Oct. 13. That reduced this year’s loss to 15.4 percent. The lira has been the second-worst performer this year, after the South African rand, among 25 emerging-market currencies tracked by Bloomberg.

“It is possible that the central bank will provide less liquidity than needed by the market,” Fatih Keresteci, a strategist at HSBC Holdings Plc in Istanbul, said in a note to clients. The lira could rally to 1.82 “in the initial stage,” Keresteci said.

The Ankara-based central bank has spent $8 billion of its reserves since Aug. 5 to arrest the lira’s decline, which has stemmed from the size of the current-account deficit and escalating concern about European debt. The overnight lending rate was raised to 12.5 percent from 9 percent on Oct. 20.

Yields on the two-year benchmark debt rose 4 basis points, or 0.04 percentage points, to 9.47 percent, in their advances for a fourth day, a Turk Ekonomi Bankasi index of the securities showed.

--Editors: Tim Farrand, Lukanyo Mnyanda

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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