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Turkish lira, “bonds rise” with world market

Posted on: April 15, 2009


Reuters – Wednesday, April 15

ISTANBUL, April 14 – The Turkish lira and bonds firmed on Tuesday, with yields on the benchmark paper hitting a historic low, as appetite for emerging markets increased.

Investors were more willing to buy riskier assets on growing optimism in global markets about the banking sector, while safe-haven government bonds also remained steady.

In Turkey, yields on the busiest bond, maturing on Feb. 2, 2011 <0#TRTSYSUM=IS>, fell to 12.88 percent from a previous close of 12.96 percent. It touched an all-time low of 12.57 percent in intra-day trading with few sellers in the market to meet demand, traders said.

“The positive trend that started in the markets in late March continues,” said a trader in Istanbul on condition his name not be used. “Improved global markets and expectations of an IMF deal have increased demand for Turkish assets.”

Turkey and the International Monetary Fund will sign a lending pact, expected to be worth between $25 billion and $45 billion, that will help the government and corporations cover their foreign-denominated debt during the global credit crunch.

The lira <IYIX=> has gained 5.7 percent since the end of March. On Tuesday, it traded at 1.5725 against the dollar versus a previous close of 1.5740.

The lira and debt yields are also falling ahead of a meeting of the central bank’s monetary policy committee on Thursday. Policy makers are expected to reduce interest rates by 50 basis points in what would be the sixth consecutive rate cut since November.

The ISE National 100 index <.XU100> fell 1.01 percent to 28,160.81, underperforming the MSCI index of emerging-market stocks <.MSCIEF>, which was 1.27 percent higher.

Banking stocks <.XU100>, which account for 42.52 percent of the measure, fell 1.01 percent.

The market is still 12 percent higher this month on hopes the government will agree on a deal with the IMF.

Turkish foodmaker Ulker <ULKER.IS> jumped 10.38 percent to 2.02 lira after its parent company Yildiz Holding said it was establishing a 50-50 percent joint venture in the confectionary business with Denmark-based Gumlink, a chewing-gum producer. Investors shrugged off Tuesday’s March budget data, which showed the deficit grew to 8.77 billion lira from the previous year’s 4.87 billion lira.

The data was largely priced in, traders said, after the government on Monday raised its 2009 budget-deficit target to 48 billion lira from 10.4 billion lira as the global crisis hit tax revenues and stimulus measures raised public spending.

 (Reporting by Selcuk Gokoluk, writing by Ayla Jean Yackley, editing by Victoria Main)

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