Bloomberg News

Lira Climbs Most in Two Weeks as Current-Account Gap Narrows

July 11, 2012

The lira strengthened the most in almost two weeks and bond yields dropped to a 10-month low after Turkey’s current-account deficit narrowed more than economists anticipated.

The lira appreciated 0.5 percent to 1.8075 against the dollar at 5:07 p.m. in Istanbul, the biggest jump on a closing basis since June 29. Yields on two-year benchmark bonds dropped three basis points, or 0.03 percentage point, to 7.90 percent, extending this month’s decline to 57 basis points. This was the lowest closing level for bond yields since Sept. 9.

The current-account gap shrank for a seventh month in May to $5.8 billion from $7.9 billion a year earlier, the central bank said today. It was forecast at $6.2 billion, according to the median estimate of five economists surveyed by Bloomberg. A record shortfall at 10 percent of the gross domestic product led the lira to plunge 18 percent in the biggest decline worldwide last year.

“We expect to see further improvement in the current- account deficit -- albeit slower pace compared to May -- in the coming months thanks to the overall slowdown in economic activity and relatively lower petroleum price,” Ozgur Altug, chief economist at BGC Partners in Istanbul, said in an e-mailed note.

Oil prices are down 13 percent this year, helping Turkey’s finances as the country imports almost all the oil it consumes.

The central bank provided liquidity to lenders today at 5.75 percent for a 27th consecutive day, the longest stretch of funding at the lowest policy rate since March 21, reducing the overnight borrowing costs in the interbank market to 8.2 percent from 9.6 percent on June 29.

To contact the reporters 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


Too Cool for Crisis Management
LIMITED-TIME OFFER SUBSCRIBE NOW
 
blog comments powered by Disqus