Turkey’s benchmark bond yields climbed to the highest level in 2 1/2 months on speculation growth in loans will force the central bank to raise lenders’ reserve requirements at a policy meeting today.
Yields on two-year notes rose for a third day before the bank’s Monetary Policy Committee decision at 2 p.m. in Ankara. The panel will probably keep its benchmark one-week repo rate unchanged at 5.5 percent, according to the median estimate of 13 analysts in a Bloomberg survey.
Loan growth during the past year to March 15 accelerated to 19.9 percent, from 19.6 percent as at the end of the previous week, according to data published by the banking regulator yesterday. That’s above the central bank’s target of 15 percent by year-end. The central bank has raised the reserve requirement ratios this year to limit lending and prevent an expansion of the current-account deficit through increased imports.
The Banking Regulation and Supervision Agency data show even faster growth in lending at 20.8 percent, as of March 15, Erkin Isik, a fixed-income strategist at Turk Ekonomi Bankasi AS, said in an e-mailed note. “This increases the chances of a reserve requirement rate hike today,” he said.
Yields on two-year benchmark bonds added four basis points, or 0.04 percentage point, to 6.35 percent at 12:25 p.m. in Istanbul, the highest level on a closing basis since Jan. 4. The lira appreciated 0.1 percent to 1.8198 per dollar.
“The majority of economists are expecting increases of 0.25 percent to 0.50 percent in lira and foreign-exchange reserve requirements,” Baris Buyukdemir, the general manager of Ceros Menkul Degerler AS in Istanbul, said in an e-mailed note, citing a survey by CNCB-e television.