Bloomberg News

Lira Rises First Day in Four After Bank Increases Dollar Sales

December 15, 2011

Dec. 15 (Bloomberg) -- The lira strengthened for the first day in four and headed for the biggest gain in two weeks against the dollar after the central bank offered to sell as much as $250 million, the highest since Oct. 24.

The lira rose 0.3 percent to 1.8817 at 11:19 a.m. in Istanbul, paring this week’s decline to 2.1 percent. Yields on the two-year benchmark debt fell five basis points, or 0.05 percentage point, to 10.33 percent, a Royal Bank of Scotland index of the securities showed.

Turkey’s central bank sold $50 million in an auction yesterday. It has sold almost $9.4 billion since August in daily dollar auctions and via direct action in the market to bolster the lira and contain the rise in inflation.

Central Bank Governor Erdem Basci and policy makers have “already signaled that they are uncomfortable and they will increase foreign exchange auction sales” at a meeting with analysts in London this week, Thu Lan Nguyen, a currency strategist at Commerzbank AG in Frankfurt, said in e-mailed comments.

Double-Digit Inflation

Turkey’s unemployment rate fell to 8.8 percent in September, the lowest since the data series began in January 2005, from 11.3 percent a year earlier, the statistics office said. Its budget surplus in November was 2.1 billion liras ($1.1 billion), the Finance Ministry said on its website today. The surplus followed a deficit of 365 million liras a year earlier.

“The economy is still dynamic and the market is pricing in double-digit inflation expectations for the first three months of next year,” Murat Yardimci, chief trader at ING Bank AS in Istanbul, said in e-mailed comments.

Inflation in 12 months is expected to fall to 7.15 percent, compared with an estimate of 6.99 percent two weeks ago, a fortnightly central bank survey of economists and business leaders showed Dec. 7. The inflation rate rose to 9.5 percent in November from 7.7 percent a month earlier, the statistics office announced Dec. 5.

--Editors: Ash Kumar, 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: Gavin Serkin at gserkin@bloomberg.net


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