Lira Gains Most in a Year as U.S. Jobs Data Boosts Risk Appetite

The lira strengthened the most this year as U.S. payrolls climbed more than forecast in July, increasing investor appetite for riskier emerging-market assets. Bonds rallied.

The Turkish currency appreciated 1.3 percent to 1.7792 per dollar, the most on a closing basis since Dec. 30, and reached the highest since May 9. Yields on two-year benchmark bonds dropped 18 basis points, or 0.18 percentage point, to 7.49 percent, the least since January 2011.

The payrolls increase of 163,000 followed a revised 64,000 gain in June that was smaller than initially reported, Labor Department figures showed today in Washington. The median estimate of 89 economists surveyed by Bloomberg News called for a gain of 100,000.

“Markets have fully switched into risk-on mode following the non-farm payrolls report,” Thu Lan Nguyen, a currency strategist at Commerzbank AG in Frankfurt, said in e-mailed comments. “The data release initially was USD supportive, as it decreased yet again the probability of QE3, and shortly afterwards it turned into a major boost of risk appetite.”

Turkey’s central bank lent 6 billion liras ($3.3 billion) at its lowest 5.75 percent policy rate for a second day, compared with 4 billion liras it provided a week earlier. The inflation rate fell 0.23 percent in July, the statistics office in Ankara said on its website today, beating the 0.18 percent median forecast of six economists surveyed by Bloomberg.

Central bank Governor Erdem Basci introduced an interest-rate corridor in October to execute the bank’s unique monetary policy, switching between rates of 5.75 percent and 11.5 percent on a daily basis to tame inflation.

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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