The lira rose for the first day in four, rebounding from the lowest in more than two years, after the central bank cut its lending rate for deposits in dollars and euros to help boost foreign exchange liquidity. The lira gained 0.9 percent to 1.7659 per dollar at 10:03 a.m. in Istanbul. The bank in Ankara lowered the lending rate in dollars to 4.5 percent from 5.5 percent and the rate in euros to 5.5 percent from 6.5 percent, according to an e-mailed statement today. “This is positive in the sense that it is showing the central bank’s intentions,” Baris Karaayvaz, a currency trader at Turkiye Garanti Bankasi AS in Istanbul, said in e-mailed comments. “The central bank is cutting the cost of liquidity and it does not want to permit extreme movements that may be caused by the absence of liquidity.” The central bank has taken measures to stem a decline in the lira that may encourage higher inflation, including starting dollar-selling auctions on Aug. 5. “Developments in the foreign exchange market will be watched closely and measures that are needed will be taken in a timely fashion,” the central bank said in a statement accompanying today’s decision. The lira trimmed its loss to 4.2 percent since Aug. 4, when the central bank cut its interest rates by half a percentage point to a record low of 5.75 percent at an extra-ordinary meeting, citing risk of a recession spreading from Europe. Yields on the two-year bonds climbed one basis point, or 0.01 percentage point, to 8.35 percent, a RBS local bond index showed. 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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