Bloomberg News

Lira Appreciates for First Time in Three Days as Central Bank Cuts Lending

March 13, 2012

The lira strengthened for the first time in three days as the central bank reduced money available to lenders after the currency lost ground yesterday, weakening to a six-week low.

The lira appreciated 0.4 percent to 1.7878 per dollar as of 12:53 p.m. in Istanbul after it weakened 0.4 percent yesterday to its lowest level since since Jan. 25.

“It is possible that the central bank wants to support the lira,” Bugra Bilgi, a hedge fund manager at Garanti Asset Management in Istanbul, said in e-mailed comments. “The lira versus the currency basket is very high and this is not very pleasant.” The lira rose 0.5 percent against a basket of euro and dollars to 2.0668, the most since Feb. 29.

Turkey’s current-account deficit came in at a record $6 billion, or 10.3 percent of gross domestic product, according to the Ankara-based central bank, lagging the $5.5-billion median estimate of six economists surveyed by Bloomberg. The bank offered to lend 4 billion liras ($2.2 billion) today in one-week repo auctions, down from 6 billion liras last week, cutting lending for the first time in three days.

Yields (BENCH) on the two-year benchmark debt retreated three basis points, or 0.03 percentage point, to 9.29 percent, according to a Turk Ekonomi Bankasi AS (TEBNK) index of the securities showed.

Turkey’s deficit is the highest in the world among 60 major economies tracked by the International Monetary Fund. The lira lost 18 percent in the biggest depreciation worldwide as a widening current-account deficit and inflation at twice the central bank’s target in 2011 hurt investor confidence.

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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