Lira Advances Second Day as Fed Expected to Keep Policy Loose

The lira gained for a second day on speculation the U.S. Federal Reserve will renew its commitment to asset buying, extending its loose monetary policy and boosting investors’ appetite for riskier assets.

The lira appreciated 0.1 percent against the dollar at 1.7671 at 3 p.m. in Istanbul, extending this month’s appreciation to 0.9 percent. Yields on two-year notes rose two basis points, or 0.02 percentage points, to 5.84 percent.

The Federal Open Market Committee will propose a continuation of its bond purchases during a two-day meeting that ends today, after determining the benefits from the program exceed any risk of inflation or financial instability, according to economists surveyed Jan. 24-25. Bernanke has said the policy will be maintained until there are “substantial” gains in employment. Most emerging-market currencies in Europe strengthened against the dollar today.

The lira is “benefiting from risk-on sentiment which keeps driving investors into riskier assets,” Felix Herrmann, a research analyst at DZ Bank AG in Frankfurt, said in e-mailed comments.

Turkey sold about $200 million of 20-year yen-denominated bonds at a coupon of 2.68 percent today, the Treasury said in a statement. The government sold $1 billion of 2041 dollar bonds last month at 4.35 percent and $1 billion of 2023 dollar bonds in January at 3.25 percent.

Akbank TAS (AKBNK), the Turkish lender part-owned by Citigroup Inc., is selling today the country’s first lira-denominated bonds to foreign investors, according to a person with knowledge of the deal.

The lender is offering five-year debt to investors abroad at a yield about 7.55 percent, said the person, who asked not to be identified because the information isn’t public yet. Akbank hired Bank of America Merrill Lynch, Deutsche Bank AG, Citigroup, HSBC Holdings Plc and JPMorgan Chase & Co. for the sale, the person said.

To contact the reporter on this story: Selcuk Gokoluk in Istanbul at sgokoluk@bloomberg.net

To contact the editor responsible for this story: Claudia Maedler at cmaedler@bloomberg.net

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