Tags: Turkey | lira | rebound | sales

Turkey's Lira Rebounds From Record as Dollar Sales Reach Most in 12 Years

Monday, 08 Jul 2013 10:14 AM

The lira rebounded from a record low against the dollar after the Turkish central bank sold the most foreign exchange since it started daily currency auctions 12 years ago.

The central bank sold $2 billion in six currency auctions today. It also refrained from holding its one-week repurchase agreements auction, starting extra tightening by curbing the supply of liras to commercial lenders. “It’s essential that extra monetary tightening be strong, effective and temporary,” Governor Erdem Basci said in an e-mailed statement today, after the lira tumbled to a record 1.9740 per dollar.

“The central bank will hold aggressive foreign-exchange sale auctions to stop the pressure on the lira,” Ali Cakiroglu, an Istanbul-based strategist at HSBC Asset Management, wrote in an e-mailed note.

The currency strengthened 1.1 percent to 1.9454 a dollar at 3:46 p.m. in Istanbul, paring the decline this year to 5.9 percent, the second-biggest depreciation among markets in Europe, the Middle East and Africa. Yields on two-year benchmark notes surged 47 basis points, or 0.47 percentage point, to 8.26 percent.

The bank has sold $4.65 billion of dollars since June 11, including $2 billion today to curb the lira’s drop as anti-government protests roiled local markets and inflation accelerated to the fastest pace since September.

The duration of policy tightening will depend on developments in the foreign currency market, Basci said.

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The lira rebounded from a record low against the dollar after the Turkish central bank sold the most foreign exchange since it started daily currency auctions 12 years ago.
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2013-14-08
Monday, 08 Jul 2013 10:14 AM
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