Turkey’s Lira Rallies as Greek Debt Deal Expectation Fuels Risk Appetite

The lira advanced for a second day, heading for its strongest level in more than three months on speculation a deal between Greece and international creditors will fuel appetite for emerging-market assets.

The Turkish currency appreciated 0.2 percent at 1.7461 per dollar as of 5:19 p.m. in Istanbul. A close at this level would be the strongest since Oct. 28. Yields on the benchmark two-year bond fell 2 basis points, or 0.02 percentage point, to 9.33 percent, a Turk Ekonomi Bankasi AS index of the securities showed.

“The euro is recovering with positive reports coming out of Greece and this increases demand for higher-yielding countries,” Suha Yaygin, deputy chief of emerging markets trading at Toronto-Dominion Bank in London, said in e-mailed comments.

Greek Prime Minister Lucas Papademos met with the European Commission, the European Central Bank and the International Monetary Fund to put the final touches on terms required for a 130 billion-euro ($172 billion) rescue package. He will meet with the leaders of Greek political parties in Athens today. The euro touched $1.3287, the highest since Dec. 12. European countries buy roughly half of Turkish exports.

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 gained 8.3 percent this year on account of stronger risk appetite for emerging-market currencies. The lira strengthened in January after the U.S. Federal Reserve Chairman Ben S. Bernanke said interest rates will remain exceptionally low for longer and hinted there would be a 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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