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Turkish Lira Heads for Six-Week High After Borrowing Auctions

Turkey’s currency gained for a second day, headed for the highest level in almost six weeks against the dollar, after the Treasury successfully borrowed in this year’s first debt auctions.

The lira appreciated 0.5 percent to 1.8442 per dollar at 4:41 p.m. in Istanbul, heading for the strongest level since Dec. 9. The lira futures contracts with Feb. 29 settlement showed the currency at 1.8635 versus the dollar, the strongest level since Dec. 5. The currency advanced 2.5 percent this year in the best performance among emerging markets in Europe, the Middle East and Africa.

The Ankara-based Treasury sold a net 3.71 billion liras ($2 billion) of 14-month bonds at an average annual yield of 10.94 percent in an auction and earlier non-competitive sale today. The Treasury also sold a net 867.8 million liras of six-year floating rate notes at an average price of 96.12 liras in a separate auction and non-competitive sale, the central bank said. The total sale was 4.58 billion, ahead of a repayment of 4 billion liras of debt to investors tomorrow.

“We saw good demand for the short-term paper because the central bank continues to fund the market at 5.75 percent and the exchange rates have eased seriously,” Bugra Bilgi, a hedge fund manager at Garanti Asset Management in Istanbul, said in e- mailed comments.

The Treasury will hold a total of six auctions this month to borrow 14.4 billion liras in domestic debt, according to a program published on Dec. 30. The Treasury will repay 17.8 billion liras of domestic debt this month, the highest monthly repayment in a year. Turkey’s central bank funded other lenders at its lowest one-week repo rate of 5.75 percent for a sixth day, providing seven billion liras today.

To contact the reporters 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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