The lira fluctuated between gains and losses after the inflation rate rose to the highest in 3 1/2 years.
The Turkish currency appreciated as much as 0.3 percent to 1.7559 per dollar, paring an earlier depreciation of 0.2 percent. It traded less than 0.1 percent weaker at 1.7618 per dollar by 5:49 p.m. in Istanbul. The central bank is due to publish its assessment on the latest inflation data tomorrow.
The inflation rate jumped to 11.1 percent in April from 10.4 percent in the previous month, the highest yearly rise since October 2008, on account of higher food and energy costs, according to the statistics office in Ankara. The median forecast in a Bloomberg survey of seven economists was 11 percent.
“The central bank may return to exceptional days in the coming days,” Gizem Oztok Altinsac, an economist at Garanti Investment in Istanbul, said in an e-mailed note.
Turkey’s central bank varies its funding rate on a daily basis, maintaining borrowing costs within a 5.75 percent to 11.5 percent interest-rate corridor introduced last year. Days when the bank does not lend at the 5.75 percent rate are considered “exceptional days.” The most recent round of policy tightening began on April 11.
The bank lent one billion lira at its lowest 5.75 percent rate at the one-week repurchase agreements auction today, the lowest amount since April 26.
The yield on the two-year benchmark bonds fell one basis point, or 0.01 percentage point, to 9.33 percent.
Currency forwards show the lira may slump to 1.85 per dollar by the end of this year. Turkey’s inflation rate is the steepest among major emerging markets worldwide. Its current- account deficit is about 10 percent of gross domestic product, the biggest among 60 major economies tracked by the International Monetary Fund as a proportion of GDP.
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