The lira gained the most in almost two years as the U.S. and Russia agreed on a plan for Turkey’s neighbor Syria to eliminate chemical weapons and Lawrence Summers dropped his bid to become the Federal Reserve chairman.
The lira appreciated as much as 1.9 percent against the dollar and traded up 1.5 percent to 1.9978 by 12:02 p.m. in Istanbul, the most since October 2011 on a closing basis. Yields on benchmark two-year notes slid 22 basis points, or 0.22 percentage point, to 8.91 percent, set for the lowest level in more than a month.
The agreement establishes a framework for finding, securing and destroying Syria’s stock of poison gas. Summers would tighten Fed policy more than Janet Yellen, who was his main rival to replace Chairman Ben S. Bernanke, according to a Bloomberg Global Poll last week. The dollar weakened against almost all its major peers after Summers pulled out of the race.
The “withdrawal is positive for all emerging markets and an agreement on Syria is extra positive for Turkey,” Burcin Metin, the Istanbul-based head of currency trading at ING Bank AS, wrote in e-mailed comments yesterday.
The lira pared its losses in the past three months to 6.9 percent, the steepest depreciation among the European, the Middle Eastern and African currrencies monitored by Bloomberg.
Turkey’s central bank said it would sell at least $180 million for liras in an auction today. It refrained from holding a one-week repurchase agreements auction today as part of the additional tightening measures outlined by the regulator to support the Turkish currency.
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