Lira Rallies for Third Day, Bonds Rise on Greek Deal Prospects
January 30, 2012, 1:58 AM ESTBy Selcuk Gokoluk
Jan. 27 (Bloomberg) -- The lira advanced for a third day and bonds gained after stronger prospects of a deal on Greek debt and a Bank of America Merrill Lynch call to buy Turkish bonds lifted investor sentiment.
The Turkish currency appreciated 0.6 percent to 1.7830 per dollar as of 12:32 p.m. in Istanbul, raising its weekly gains to 2.6 percent. A close at this level would be highest since November 11.
Yields on two-year benchmark debt fell one basis point, or 0.01 percentage point, to 9.61 percent, extending yesterday record 75 basis points drop, according to a Turk Ekonomi Bankasi AS index, after the Federal Reserve said it foresees “exceptionally low” interest rates through 2014 and signaled this week that it may embark on another program of quantitative easing.
European Union Economic and Monetary Affairs Commissioner Olli Rehn said authorities are ‘very close’’ to reaching an agreement on a private-sector involvement in Greece this month. Italian borrowing costs fell at today’s 8 billion euros ($11 billion) bill auction. Turkey sells roughly half of its exports to European countries.
“Foreigners are entering our market as the euro rallies after the good result in Italian auction and Greek deal,” Burcin Metin, chief currency trader at ING Bank AS, said in e- mailed comments from Istanbul.
A signal from the Fed in favour of quantitative easing may be “decisive” in attracting buyers back to the market, Bank of America Merrill Lynch said, recommending investors buy the Turkish local bonds,.
Turkey’s current-account deficit has already peaked and will narrow over 2012 as economic growth slows, strategists including Arko Sen said in a report dated yesterday. The deficit fell in November for the first time in two years, bringing the cumulative 12-month total to $77.8 billion, still equivalent to about 10 percent of gross domestic product.
--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
