Lira Weakens 1st Time in 3 Days on Moving Average, Spain Rating

The Turkish lira weakened for the first time in three days as it faced resistance after nearing a key technical level and Spain’s credit rating was cut, hurting demand for the riskier emerging-market assets.

The Turkish currency depreciated 0.1 percent to 1.8222 per dollar at 1:06 p.m. in Istanbul, trimming its gain this year to 3.8 percent, the biggest appreciation among major developed and emerging-market currencies after the Colombian peso.

The lira has appreciated 2.5 percent since May 31, approaching its 200-day moving-day average of 1.8146, a key level for technical analysts, in intraday trade today. On May 31, Turkey announced its trade deficit for April narrowed more than expected, contracting for a sixth month and beating analyst estimates. Its current-account deficit retreated in April for a sixth month, the central bank said June 11. Global stocks dropped and Spain’s bond yields rose to a euro-era record after the country’s credit rating was cut to one level above junk by Moody’s Investors Service yesterday.

“The risk appetite has simply run out of steam and therefore we were unable to breach the 200-day moving-average support,” Thu Lan Nguyen, a currency strategist at Commerzbank AG in Frankfurt, said in e-mailed comments. “Spanish yields are rising again so markets are definitely putting pressure on periphery countries again,” she added.

In technical analysis, crossing the 200-day moving average threshold and remaining above it is an indication the currency’s move may be sustained.

“Local companies have a constant foreign-exchange need and they want to meet some of this demand after the lira declined from levels around 1.87 to 1.8150,” Burcin Metin, chief currency trader at ING Bank AS in Istanbul, said in e-mailed comments.

The yield on benchmark two-year bonds was unchanged at 9.18 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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