Lira Rises Most in Two Weeks as Oil Falls, Coalition Talks StartConstantine Courcoulas
The lira rose the most among its emerging-market peers as lower oil prices boosted the outlook for Turkey’s balance of payments deficit and talks to form a coalition government in the oil importer started.
The currency climbed 0.7 percent to 2.6475 versus the dollar at 6:23 p.m. in Istanbul, heading for its biggest increase in two weeks. Oil dropped for the first time in five days as Iran and the U.S. edged closer to a nuclear deal, fueling bets that lower energy prices will help shore up Turkey’s current-account shortfall.
The country, which imports most of its energy needs, has the second-biggest current-account gap relative to its gross domestic product among the Group of 20 biggest economies. Prime Minister Ahmet Davutoglu told reporters in Ankara on Monday that his party reached a common understanding with opposition leader Kemal Kilicdaroglu to continue coalition talks after meeting him for the first round of negotiations.
The Iran deal is “critical insofar as it can cap or even put further pressure on oil prices,” which is beneficial for Turkey’s balance of trade, Pinar Uslu, a strategist at ING Bank in Istanbul, said by e-mail. “It’s too early to read too much into coalition talks, but the general tone following the CHP-AKP meeting appears positive.”
Davutoglu was formally re-appointed prime minister on July 9 with the task of securing partners after his governing AK Party lost its majority in last month’s election. President Recep Tayyip Erdogan can call another election if a new government isn’t formed within a 45-day period.
The lira was also buoyed this morning by improving risk sentiment after Greece reached an agreement with its creditors over reforms needed to start talks for a third bailout.
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