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Lira Heads for Biggest Fall This Year as Greek Talks Stumble

Feb. 9 (Bloomberg) -- The lira depreciated for the first time in three days after leaders of neighbouring Greece failed to agree on economic measures needed to a secure an aid package.

The Turkish currency declined 0.8 percent at 1.7625 per dollar at 1:53 p.m. in Istanbul, heading for the biggest decline this year. Yields on the benchmark two-year bond were unchanged at 9.33 percent, a Turk Ekonomi Bankasi AS index of the securities showed.

Greek Finance Minister Evangelos Venizelos headed to Brussels today as politicians in Athens narrowed their differences to the single issue of pension cuts needed to secure a 130 billion euro ($173 billion) bailout.

Talks stumbled over pensions and officials from the European Union and the International Monetary Fund gave Greece 15 more days to identify measures totaling 300 million euros. A euro region official said a Greek default will not be on the agenda of today’s emergency finance ministers’ meeting, which starts at 6 p.m. in Brussels.

“We are seeing demand from foreign investors,” Tufan Comert, a strategist at Garanti Yatirim Menkul Kiymetler in Istanbul, said in e-mailed comments. “This appears to be linked with the situation in Greece.”

The lira gained 7.4 percent this year against the dollar after sinking 18 percent last year as credit growth and an expansion in trade deficit slowed as a result of higher lending rates of as much as 12.5 percent by the central bank. Risk appetite for emerging markets was also spurred this month after Federal Reserve Chairman Ben S. Bernanke said U.S. interest rates will remain exceptionally low for longer and hinted there would be a third round of quantitative easing.

“The market is likely experiencing a bit of profit taking,” Roderick Ngotho, the London-based emerging-markets currency strategist at Royal Bank of Scotland Group Plc., said in e-mailed comments.

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

To contact the editor responsible for this story: Aydan Eksin at aeksin@bloomberg.net

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