Lira Drops to 2-Week Low Against Euro as Bersani Seen as VictorSelcuk Gokoluk
The Turkish lira depreciated to the weakest level in more than two weeks against the euro as the common currency advanced on expectations that the winning party in Italian elections will maintain austerity measures.
The lira fell 0.5 percent against the euro to 2.3830 at 5:50 p.m. in Istanbul, declining for a second day and headed for the lowest settlement since Feb. 6. The currency lost 0.7 percent against the euro last week. Pier Luigi Bersani’s center-left alliance probably captured a majority of 340 seats in the lower house, the Chamber of Deputies, according to a SkyTG24 poll.
“Expectations on Italian elections are turning more positive,” Ali Cakiroglu, a strategist at HSBC Asset Management in Istanbul, said in e-mailed comments. The euro is also benefitting from “position-switching” as investors sell the British pound for euros following a downgrade of the U.K. by Moody’s Investors Service on Feb. 22, he said.
The lira fell 0.1 percent against the dollar to 1.8024, depreciating for a sixth day in the longest streak of losses since August last year. Yields on benchmark two-year lira notes rose six basis points, or 0.06 percentage point, to 5.73 percent today.
The “low level” of Turkish rates has weakened the lira, Emre Balkeser, head of trading at Garanti Securities in Istanbul, said in e-mailed comments. The currency, which lost the most since May last week, is down 1.1 percent against the dollar this year, in the biggest depreciation among emerging markets in Europe after the Czech Koruna and the Polish Zloty.
Yields on benchmark bonds tumbled to 5.64 percent on Feb. 20, the lowest on record, from 9.67 percent on March 22, and the central bank’s average cost of funding for lenders fell to 5.53 percent last week, the lowest level since December, after the bank trimmed its overnight borrowing and lending rates to 4.5 percent and 8.5 percent, respectively.