The lira dropped to its weakest level in 4 1/2 months, erasing earlier gains, as appetite for riskier assets soured after U.S. jobless claims rose and a purchasers’ gauge unexpectedly declined.
The Turkish currency depreciated 0.5 percent to 1.8669 per dollar at 5:01 p.m. in Istanbul, the weakest level since Jan. 13. Today’s decline sent this month’s loss to 5.8 percent and trimmed this year’s gain to 1.4 percent.
First-time claims for jobless benefits increased by 10,000 to 383,000 in the week ended May 26 from a revised 373,000 the prior week, the Labor Department said today. The Institute for Supply Management-Chicago Inc. said today its barometer decreased to 52.7, the lowest since September 2009, from 56.2 in April.
“Risk appetite faltered completely after the disappointing U.S. economic data,” Thu Lan Nguyen, a currency strategist at Commerzbank AG, said in e-mailed comments. “If this continues another day or two, we could well see the central bank selling foreign exchange on the market again,” she said.
The central bank last held a dollar sale auction on Jan. 24. The amount of lira reserves lenders deposit in dollars with the Ankara-based bank was increased this week to 45 percent from 40 percent. Governor Erdem Basci plans to increase the foreign-exchange reserve ratio gradually to 60 percent.
The lira appreciated as much as 0.6 percent to 1.8458 per dollar in intraday trading after April trade deficit beat estimates and the central bank refrained from lending at its lowest funding rate for the first time this week.
The gap narrowed more than expected to $6.6 billion in April, contracting for a sixth month. It declined from $9.1 billion a year earlier, the statistics office in Ankara said on its website today. The median estimate of eight economists surveyed by Bloomberg was $7.1 billion.
“Once again a good print surprising positively with strong exports performance,” Tevfik Aksoy, chief economist for Europe, the Middle East and Africa at Morgan Stanley & Co. in London, said in an e-mailed note. “This will translate into a better than expected current-account deficit print as well.”
Turkey’s current-account gap, the world’s second-biggest last year after the U.S. at $77 billion, ballooned last year. The shortfall will probably shrink to 8.8 percent of gross domestic product this year from 10 percent in 2011, according to the International Monetary Fund.
The central bank lent 4 billion liras ($2.1 billion) today at 10.85 percent in its one-week repurchase agreements daily auction. It varies the policy rate daily between 5.75 percent and 11.5 percent within the so-called interest rate corridor which was introduced in October to defend the currency and curtail inflation.
Turkey’s inflation at 11.1 percent is at the highest level in 3 1/2 years and Governor Erdem Basci has forecast a fall to 6.5 percent by the end of this year.
The yield on two-year debt fell one basis point, or 0.01 percentage point, to 9.45 percent.