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Lira Depreciates on Rising Inflation, Greek Default Concern

Nov. 3 (Bloomberg) -- The lira weakened, extending this year’s losses to 14 percent as European leaders cut off Greek aid payments before a referendum on a bailout accord and Turkish inflation is expected to accelerate in October.

The lira weakened 1 percent to 1.7963 per dollar at 9:40 a.m. in Istanbul. That makes the lira the second worst-performer among more than 20 emerging market currencies tracked by Bloomberg.

European leaders for the first time raised the prospect of the euro area splintering, choosing to treat Greece’s December referendum on the terms of a bailout package as an in-or-out vote on the debt-stricken nation’s future in the currency union. Led by Germany and France, Europe cut off financial aid for Greece yesterday, until the vote determines whether it deserves a fresh batch of loans needed to stave off default.

“The reason why we have fallen to this level is Greece news,” said Emir Baruh, a currency trader at Akbank TAS, in e-mailed comments. “Markets are increasingly pricing a Greek debt default.”

The statistics agency in Ankara will publish inflation data for October at 10 a.m. Inflation probably accelerated to 7 percent last month, the highest level since May, from 6.2 percent in September, according to the median estimate of eight economists in a Bloomberg survey. Forecasts ranged from 6.7 percent to 7.6 percent.

To contact the reporter 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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