Turkey’s Lira Depreciates as Greece Debt-Rescue Talks Erode Risk Appetite
The Turkish lira headed for its biggest fall this month on weaker investor sentiment as the debt-swap deal between Greece and its creditors remains elusive.
The Turkish currency depreciated 0.5 percent at 1.7614 per dollar as of 5:04 p.m., paring this year’s gain to 7.4 percent in Istanbul. The weakening today is the biggest since Jan. 30. Yields on the benchmark two-year bond rose 12 basis points, or 0.12 percentage point, to 9.41 percent, a Turk Ekonomi Bankasi index of the securities showed.
European leaders stepped up pressure on Greek politicians to meet the conditions of a 130 billion-euro ($171 billion) bailout, saying time was running out. French President Nicolas Sarkozy met German Chancellor Angela Merkel in Paris today as Greece’s interim prime minister, Lucas Papademos, planned to confer with the so-called troika of international lenders in Athens. A gathering of Greek political leaders was delayed by a day until tomorrow as they struggled for a unified response.
“A lot of people expected a deal would be reached by this weekend and these expectations have been battered again,” Thu Lan Nguyen, a currency strategist at Commerzbank AG, said in e- mailed comments. “The risk appetite is waning which is weighing on the lira.”
The lira slumped 18 percent in the biggest decline worldwide and yields soared 390 basis points last year as a widening current-account deficit and worries about the European debt crisis and Middle East revolts shook investor confidence in Turkey.
Turkey’s currency has strengthened this year on account of stronger risk appetite for emerging-market currencies. The lira was bid higher in January after the U.S. Federal Reserve Chairman Ben S. Bernanke said interest rates will remain exceptionally low for longer and hinted at the third round of quantitative easing.
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
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