Bloomberg News

Lira Rebounds From Weakest in 4 1/2 Months on Trade Gap, Funding

May 31, 2012

The lira rebounded from its weakest in 4 1/2 months, paring a monthly loss, after Turkey’s April trade deficit beat analysts’ estimates, signaling Turkey’s current-account deficit may fall from last year’s record high.

The currency appreciated 0.5 percent to 1.8470 per dollar at 12:24 p.m. in Istanbul, recouping part of yesterday’s 1.3 percent decline that pushed the lira to the lowest since Jan. 13 and trimming its monthly retreat to 4.8 percent.

The trade deficit narrowed more than expected to $6.6 billion in April, contracting for a sixth month. The gap declined from $9.1 billion a year earlier, the statistics office in Ankara said on its website today. The median estimate of eight economists surveyed by Bloomberg was $7.1 billion. Turkey’s current-account deficit, the world’s second-biggest last year after the U.S. at $77 billion, ballooned last year. The shortfall will probably shrink to 8.8 percent of gross domestic product this year from 10 percent in 2011, according to the International Monetary Fund.

“Once again a good print surprising positively with strong exports performance,” Tevfik Aksoy, chief economist for Europe, the Middle East and Africa at Morgan Stanley & Co. in London, said in an e-mailed note. “This will translate into a better than expected current-account deficit print as well.”

Turkey’s exports rose 6.8 percent to $12.7 billion in April, while imports fell 8 percent to $19.3 billion, the statistics office said.

Repo Auction

The central bank refrained from lending at its lowest funding rate for the first time this week, offering to lend 4 billion liras today at its one-week repurchase agreements daily auction. The Ankara-based bank varies the policy rate daily between 5.75 percent and 11.5 percent within the so-called interest rate corridor which was introduced in October to defend the currency and curtail inflation.

Turkey’s inflation at 11.1 percent is at the highest level in 3 1/2 years and Governor Erdem Basci has forecast a fall to 6.5 percent by the end of this year.

The yield on two-year debt fell six basis points, or 0.06 percentage point, to 9.40 percent, paring the rise this month to 8 basis points.

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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