Lira Gains Third Day Before Hefty Outflows; Bond Yields Decline

The lira strengthened for a third day, heading for its strongest level in almost seven weeks, before “hefty” quarterly tax payments and repurchase agreements redemptions tomorrow.

The Turkish currency appreciated less than 0.1 percent to 1.7898 per dollar at 4:18 p.m. in Istanbul, the highest on a closing basis since Aug. 10, according to data compiled by Bloomberg. Yields on two-year benchmark bonds fell four basis points, or 0.04 percentage point, to 7.56 percent.

Turkish lenders will see “hefty outflows” of 15.5 billion liras ($8.7 billion) tomorrow due to tax payments and repo redemptions, Erkin Isik, strategist at Turk Ekonomi Bankasi AS (TEBNK), said. Maximum repo funding central bank can provide on that day is 10.5 billion liras via its one-week and one-month repurchase agreements auctions, Isik said.

Turkey’s trade deficit will probably narrow to $8 billion in August from a revised $8.4 billion a year earlier, according to a Bloomberg survey of seven economists. The data is due for release tomorrow. The gap shrank 14 percent from a year earlier to $7.9 billion in July, narrowing for the nine month on an annual basis.

The central bank lent 4 billion liras at 5.75 percent in its one-week repurchase agreements auction today, compared with 3.5 billion liras yesterday and 2 billion liras a week ago, according to the Ankara-based bank.

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