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Lira Weakens Most in a Month on Greece Debt Swap, Growth Concern

The lira fell to its lowest in more than a month on concern the Greek-debt writedown plan won’t succeed and slowing growth will prove detrimental to Turkey’s exports.

The currency depreciated 1 percent to 1.7890 per dollar, the weakest level since Jan. 30, as of 5:07 p.m. in Istanbul. Yields (BENCH) on the two-year benchmark debt advanced for a fourth day, up 15 basis points, or 0.15 percentage point, to 9.40 percent, according to a Turk Ekonomi Bankasi AS (TEBNK) index.

Greece expects bondholders to accept a one-time offer to write off about 100 billion euros ($140 billion) of Greek debt and is ready to force them to participate, if necessary, Finance Minister Evangelos Venizelos said March 5 in a Bloomberg Television interview in Athens. Private investors that so far declared their participation in Greece’s debt restructuring hold about 20 percent of the bonds involved in a swap deal that ends March 8.

“Talk that PSI participation rate is projected to be less than 70 percent triggered the sales,” Sant Manukyan, a strategist at Is Investment, the broker unit if Turkiye Is Bankasi AS (ISCTR), in Istanbul, said in an e-mailed note.

The euro area’s fourth quarter gross domestic product contracted 0.3 percent from the third quarter, the European Union’s statistics office said today. Exports fell 0.4 percent after a 1.4 percent gain in the previous three months, while household spending declined 0.4 percent and investment slid 0.7 percent. About 42 percent of Turkey’s exports go to the EU.

Growth Slows

Data yesterday showed the U.S. factory orders decreased for the first time in three months and China lowered its growth target to 7.5 percent.

Turkey’s inflation rate fell for the first time in five months, reaching 10.4 percent in February from a three-year peak of 10.6 percent a month earlier, the statistics agency in Ankara said on its website yesterday. The central bank’s target for 2012 inflation is 5 percent.

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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