Turkish benchmark debt yields fell in the longest losing streak since December as the central bank offered funding at its cheapest rate for a third day. The lira appreciated for the fifth day.
Yields on benchmark two-year bonds dropped for a sixth day, retreating four basis points, or 0.04 percentage point, to 9.15 percent at the 5 p.m. close in Istanbul, the lowest level in three months. Yields retreated 186 basis points this year in the biggest decline among emerging markets after Brazil.
Inflation in May slowed to 8.3 percent from 11.1 percent in April, the biggest decrease since January 2003, the statistics office in Ankara said June 4, prompting the central bank to provide lending at its lowest 5.75 percent rate. The Ankara-based bank provided 3 billion liras ($1.6 billion) at one-week repurchase auctions today.
“We had stated that the bond yields may follow a positive track if the central bank declares today a normal day,” Ali Cakiroglu, a strategist at HSBC Private Bank in Istanbul, said in an e-mailed note. “The benchmark bond yields may retreat to 9.0 percent levels.”
The days when the central bank provides funding at its 5.75 percent benchmark interest rates are termed “normal days” and the days when the bank withholds lending at that rate are termed “exceptional.”
The lira strengthened 0.5 percent to 1.8199 per dollar in a fifth day of advances as China cut lending and deposit rates for the first time since 2008 to combat a deepening slowdown.