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The Turkish lira strengthened the most in seven weeks on investor speculation the central bank will support the currency and as prospects of an imminent strike on Syria faded. Stocks climbed.
The lira appreciated 1.1 percent to 2.0158 per dollar at 11:31 a.m. in Istanbul after gaining as much as 1.2 percent, the most since July 15. The currency weakened 5.1 percent last month, the worst performer among 31 major currencies after Indinesia’s rupiah and the Indian rupee. Yields on 10-year bonds fell 28 basis points to 10 percent, the lowest level since Aug. 21, and the BIST National 100 Index surged 2.6 percent.
Governor Erdem Basci said last week the central bank wouldn’t provide repo funding at its 4.5 percent benchmark interest rate today and promised “surprise” tools to defend the lira without saying when these measures would be announced. He vowed to keep rates unchanged this year. The central bank will sell a minimum $100 million for liras today.
The “market expects the central bank to announce further measures to lead the lira to recover its earlier weakness,” Erkin Isik, a fixed-income and currency strategist at Turk Ekonomi Bankasi AS (TEBNK), wrote in an e-mailed note. “Lack of any further measures may prompt further underperformance, at least against emerging markets.”
President Barack Obama said he’ll seek authorization from Congress before ordering military action against Syria. Turkey, which borders Syria and has supported rebels against President Bashar al-Assad, has said it could be part of a Western attack against the country over its alleged use of chemical weapons.
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