Bloomberg News

Turkish Lira Depreciates, Ends Longest Rising Streak Since 2010

November 01, 2011

Oct. 31 (Bloomberg) -- The Turkish lira weakened for the first day in eight, snapping its longest streak of appreciations in fifteen months, after the central bank provided 21 billion liras at its benchmark rate of 5.75 percent.

The lira declined 0.7 percent to 1.7566 per dollar at 11:58 a.m. in Istanbul, paring this month’s advance to 5.9 percent. The currency has lost 12 percent this year due to investor concern that the European debt crisis will worsen Turkey’s large current-account deficit.

The central bank lent 21 billion liras ($12 billion) in a two-week repo auction at its benchmark rate of 5.75 percent today, after getting 38.8 billion liras of bids from banks. The bank has also been providing additional funds to largest banks since Oct. 20 at 12 percent annual rate. It opened a two-week repo auction today because Turkish markets will be closed for the first three days of next week due to a religious holiday.

“The crunch in the lira is lessening and the volume of borrowing at the repo for the primary dealers will be relatively less today,” Baris Karaayvaz, a currency trader at Turkiye Garanti Bankasi AS, said in e-mailed comments. “For that reason, some investors may be shifting toward foreign exchange.”

Yields for two-year benchmark debt fell 2 basis points, 0.02 percentage points, to 9.74 percent, a Turk Ekonomi Bankasi index of the securities showed, declining for a third day.

--Editor: Steve Bryant

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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