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Lira Jumps Most in 3 Years on Syria Plan as Summers Withdraws

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Sept. 16 (Bloomberg) -- The lira gained the most in three years as the U.S. and Russia agreed on a plan for Turkey’s neighbor Syria to eliminate chemical weapons and Lawrence Summers dropped his bid to become the Federal Reserve chairman.

The lira appreciated 1.8 percent against the dollar to 1.9927 by 5:09 p.m. in Istanbul, the most since May 2010 on a closing basis. The currency is the best performer today among the 31 major currencies monitored by Bloomberg. Yields on benchmark two-year notes slid 39 basis points, or 0.39 percentage point, to 8.74 percent at the close of trading, the lowest level in more than a month.

The agreement establishes a framework for finding, securing and destroying Syria’s stock of poison gas. Summers would tighten Fed policy more than Janet Yellen, who was his main rival to replace Chairman Ben S. Bernanke, according to a Bloomberg Global Poll last week. The dollar weakened against almost all its major peers after Summers pulled out of the race.

The “withdrawal is positive for all emerging markets and an agreement on Syria is extra positive for Turkey,” Burcin Metin, the Istanbul-based head of currency trading at ING Bank AS, wrote in e-mailed comments yesterday.

The lira pared its losses in the past three months to 6.7 percent, the steepest depreciation among the European, the Middle Eastern and African currencies monitored by Bloomberg.

Turkey’s central bank sold $180 million for liras in a foreign-exchange sale today and pre-announced it will auction at least the same amount tomorrow. It refrained from holding its daily one-week repurchase agreements sale as part of the additional tightening measures outlined by the regulator to support the currency.

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

To contact the editor responsible for this story: Claudia Maedler at cmaedler@bloomberg.net

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