Turkish yields rose and the lira erased its losses after industrial production increased more than expected in February.
Yields (BENCH) on two-year benchmark bonds climbed four basis points, 0.04 percentage point, to 9.36 percent at 10:04 a.m. in Istanbul. The lira erased losses as much as 0.3 percent and traded little changed at 1.7960 per dollar.
Industrial production increased 4.4 percent in February from a year earlier, Turkey’s statistics agency in Ankara said today. Growth in output accelerated from 1.5 percent in January, the agency said on its website today. It was forecast at 1.6 percent in a Bloomberg survey of five economists. Production climbed 1.6 percent from a year earlier when adjusted for the number of working days, and 0.7 percent from the previous month, the agency said.
“The central bank will continue to be flexible according to the moves of exchange rates and oil prices and keep the tightening option on the markets’ agenda,” Inan Demir, chief economist at Finansbank AS in Istanbul, said in e-mailed comments.
Turkey may take more steps to tighten monetary policy amid concerns that commodity price fluctuations will boost inflation, Central Bank Governor Erdem Basci said April 7. Basci introduced a dual interest rates policy in October that allows him to lend to banks at a high or low point in a so-called interest rates “corridor,” which varies between 5.75 percent and 11.5 percent.
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