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Turkish lira hovers near record lows

Istanbul, August 26, 2013

The Turkish lira hovered just off record lows near two to the dollar on Monday while the 2-year benchmark bond yield inched above 10 per cent in quiet trade, as heightened concern over the conflict in Syria weighed.

The lira was at 1.9975 against the dollar by 1000 GMT, up from 1.9940 late on Friday, while the two-year benchmark yield rose to 10.12 per cent, nosing above 10 per cent for the first time in 19 months.

"The Turkish lira is seemingly under added pressure due to heightened tension in Syria," said a note from Ekspres Invest.

UN inspectors left central Damascus on Monday for sites of an alleged chemical weapons strike in the suburbs, after calls from Western powers for military action to punish what may be the world's worst chemical attack in 25 years.

Turkish Foreign Minister Ahmet Davutoglu was quoted on Monday as saying that Turkey would join any international coalition against Syria even if unanimous agreement is not reached at the UN Security Council.

The central bank will hold a forex auction later in a bid to support the lira with a minimum volume of $350 million, in line with additional monetary tightening steps announced last week.

It also held its first one-week, fixed-rate repo auction in almost a week, with a volume of 1.5 billion lira ($755 million).

The bank has been tightening monetary conditions through an unorthodox mix of repo auctions and changes in its interest-rate corridor, its guide on managing liquidity, but has left its main benchmark rate - the one-week repo rate - unchanged at 4.5 per cent.

The 10-year benchmark bond yield rose to 10.48 per cent from a close of 10.32 per cent on Friday with Turkey's current account weakness and the risk of a cut in the US bond buying programme continuing to pressure markets.

Emerging markets fell sharply last week on concerns that the US Federal Reserve could reduce its massive bond buying programme as early as next month, with Turkey left particularly exposed by its high current account deficit.

The main Istanbul share index fell 0.07 per cent to 67,885.73, underperforming the broader emerging markets index , which rose 0.39 per cent. - Reuters




Tags: US | Syria | bond | Turkish | concern | low | lira |

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