Lira Jumps Most in 4 Days as Fitch Says Close to Rating Review

The lira headed for the biggest gain in four days after Fitch Ratings said it was “quite close” to reviewing the country’s top junk status.

The currency appreciated 0.4 percent to 1.8180 per dollar by 2:12 p.m. in Istanbul. Bond yields were unchanged at 7.63 percent.

Fitch is “quite close” to reviewing Turkey rating, Paul Rawkins, senior director at Fitch Ratings, said at a conference in London today. Turkey’s budget deficit will come in at 2.3 percent of gross domestic this year and decline to 2.2 percent in 2013, Deputy Prime Minister Ali Babacan said while announcing the country’s economic plan in Ankara yesterday. This compares with a shortfall of 5.3 percent in euro area, 5.1 percent in Poland and 3.1 percent in the Czech Republic.

“Markets got excited after the Fitch” comments, Baris Buyukdemir, general manager of Ceros Securities in Istanbul, said in e-mailed comments. “There will be a decision in the short term.”

The lira weakened the most in two months last week after Turkey retaliated against shelling by Syria that claimed five lives. Turkey’s top general Necdet Ozel warned of a tougher response if Syrian shells continue to land in Turkey.

Turkey is a stable story with “strong” public finances, and Syria conflict is “not having huge impact” on Turkey budget, Rawkins said. Fitch rates Turkey BB+, one level below investment grade with a stable outlook.

Moody’s, which rates the country one level below investment grade, said on Oct. 8 it will assess Turkey’s upgrade if fragility is reduced. Standard and Poor’s rates the nation BB, two levels below investment grade.

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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