ISTANBUL: The Turkish lira rebounded on Tuesday from its previous day's lows after the central bank doubled the amount of foreign exchange it sells at auction, while investors looked to Wednesday's presentation on 2015 monetary policy for further direction.
The lira stood at 2.2616 against the dollar at 0927 GMT, firming from 2.2677 late on Monday. It had hit a low of 2.2809 earlier on Monday, its weakest since Oct. 16.
The lira recovery began after the central bank said it was raising the volume of its daily forex auctions to $40 million from Tuesday to counter volatility triggered by speculation about a rise in U.S. interest rates next year. It also sold $40 million at its Monday auction to support the lira.
"The Turkish central bank's move to increase daily FX auctions showed that they will remain vigilant against any depreciation pressure, although the amounts provided are purely symbolic," TEB-BNP Paribas strategist Erkin Isik said in a note.
"Markets will be waiting for guidance from Governor (Erdem) Basci in his presentation of monetary and exchange rate policy for 2015, which we think will be more on the cautious side."
The lira was hit by global gains in the dollar after Friday's U.S. jobs figures bolstered the case for a rise in U.S. interest rates in 2015. Turkey would be vulnerable to a rate increase in the world's largest economy because it depends on foreign inflows to finance its large current account deficit.
Istanbul's main share index, which dipped 0.49 percent on Monday, was 0.18 percent higher at 84,963.94 points on Tuesday, outperforming a 1 percent fall in the main emerging markets index.
The benchmark 10-year government bond yield fell to 8.15 percent from 8.19 percent on Monday.
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