Bloomberg News

Lira Gains First Day in Three Before Greek Bailout Meetings

November 02, 2011

Nov. 2 (Bloomberg) -- The lira strengthened for the first time in three days as European leaders prepared to meet for talks on Greece’s bailout referendum and Turkey’s central bank sold dollars for the first time in a week.

The lira rose 0.9 percent to 1.7762 per dollar at 3:10 p.m. in Istanbul, paring this year’s losses to 13 percent, the worst performance among more than 20 emerging-market currencies tracked by Bloomberg after South Africa’s rand. Yields on the two-year benchmark bond fell 14 basis points, 0.14 percentage points, at 9.95 percent, a Turk Ekonomi Bankasi AS index of the securities showed.

Greek Prime Minister George Papandreou, his hold on power weakening, was summoned to Cannes on the eve of a Group of 20 summit where he will hear from French President Nicolas Sarkozy that the “only way to resolve Greek debt problems” is through a deal hammered out last week. Turkey’s central bank sold $50 million for liras in its first dollar auction since Oct. 25.

The “meeting today to continue crisis talks is giving some relief for markets,” said Thu Lan Nguyen, a currency strategist at Commerzbank AG in Frankfurt, said in e-mailed comments. “Obviously, again people are expecting some positive outcome from this as the motto remains any decision is better than no decision.”

The lira tumbled to a week low yesterday and global stocks declined as concern of a disorderly Greek default mounted after Papandreou announced his desire to hold a referendum on the rescue pact.

Dollar Sales

Turkey’s central bank has sold around $8.5 billion since Aug. 5 to shore up the currency in auctions and directly sold dollars in the market in its first intervention in the currency market since 2006 on Oct. 18 after the currency fell to a record low against the dollar at 1.9096 on Oct. 4.

“The central bank’s support is making a positive effect on the currency,” Ugursel Onder, a fixed-income analyst at Is Investment Securities who attended a central bank meeting yesterday in Istanbul, wrote in e-mailed comments. “The central bank will intervene if it sees great volatility in the lira again.”

--Editor: Stephen Kirkland, Alex Nicholson

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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