BLBG:Lira Rebounds From Low as Basci Adds to $600 Million Dollar Sales in Week
Turkey’s currency headed for the biggest gain in nine days as the central bank sold almost $600 million of foreign reserves this week to shore up the lira after it fell to a record low.
The lira rose 0.6 percent to 1.8507 per dollar at 11:20 a.m. in Istanbul, rebounding from an all-time low of 1.8610 at yesterday’s close. The central bank offered as much as $70 million in U.S. currency today, bringing the total this week to $590 million at daily auctions, to bolster the lira, which has depreciated 12.3 percent this quarter.
Turkey’s currency is posting the biggest declines in emerging markets this year, dropping 16.6 percent, as a widening current-account deficit and worsening European debt crisis hurt investor confidence in the nation’s financial stability. Turkish policy makers have lowered borrowing costs three times since December, by 1.25 percentage points, to 5.75 percent to help guard the economy from the global slowdown, and central bank Governor Erdem Basci reiterated a commitment yesterday to cut interest rates and reserve requirements to boost the economy..
“Things for the lira look difficult in the coming days if the central bank does not increase the foreign exchange sale volumes significantly,” Emir Baruh, a currency trader at Akbank TAS in Istanbul, said by telephone.
Yields on the benchmark two-year lira-denominated bond fell three basis points, or 0.03 percentage point, to 8.36 percent, the RBS Istanbul Benchmark Bond Index showed.
Nordea Bank AB changed its three-month forecast for the lira today, saying it will depreciate to 1.92, more than its previous forecast of 1.79, Elisabeth Andreew, chief foreign exchange strategist at the Copenhagen-based bank said in e- mailed comments.
Andreew said investors are unwinding long positions in the lira, and the nation’s current account deficit is “still high and the tourist season is coming to an end.”
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
