Bloomberg News

Lira Falls First Time in Three Days on Oil Price, Strong Dollar

March 09, 2012

The lira weakened against the dollar for the first time in three days on concern higher energy costs will widen Turkey’s trade deficit and after the U.S. currency strengthened off the back of strong employment data and completion of the Greek debt-swap deal.

The lira depreciated 0.6 percent to 1.7868 per dollar as of 5:18 p.m. in Istanbul. The dollar gained 1.2 percent against the euro to 1.3116, also for the first time in three days. Yields (BENCH) on the benchmark two-year bonds increased, up three basis point to 9.18 percent.

Oil rose this year on concern sanctions against Turkey’s neighbor Iran will lead to military conflict in the Middle East, where more than half the world’s crude reserves are located. Oil for April delivery gained $1.2, or 1.1 percent, to $107.79 a barrel on the New York Mercantile Exchange. Turkey’s energy bill would reach $65 billion if oil prices remain at their current levels, Economy MinisterZafer Caglayan said in Istanbul March 7, up from $54 billion in 2011.

“The increase in oil prices is negative for the lira,” Burcin Metin, chief currency trader at ING Bank AS in Istanbul, said in e-mailed comments.

Employers in the U.S. boosted payrolls more than forecast in February, capping the best six month streak of job growth since 2006. The unemployment rate held at 8.3 percent. The 227,000 increase in payrolls followed a revised 284,000 gain in January that was bigger than first estimated, Labor Department figures showed today in Washington. The median projection of economists in a Bloomberg News survey called for a 210,000 rise in February employment.

Turkey’s current-account deficit narrowed in the last two months of 2011 after surging to a record $78.6 billion in October. It is still about 10 percent of gross domestic product, the second-highest in the world after the U.S. The country is dependent on imports for almost all of its energy requirements.

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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