Turkish lira, shares up

Turkish bond yields fell 17 basis points on Friday while the lira firmed 0.4 percent versus the dollar after positive US data and speculation about more official support for troubled euro debtors reinforced global risk appetite. The euro jumped to a session high against the dollar on Friday on talk that the European Central Bank could be ramping up its lending to weak eurozone countries through the International Monetary Fund.
US employment growth picked up speed in November and the jobless rate dropped to a 2-1/2 year low of 8.6 percent, further evidence the economic recovery was gaining momentum. The yield on Turkey's benchmark bond maturing in July 2013 closed at 10.28 percent, down from the previous close of 10.32 percent. During intraday trade, the benchmark yield fell as much as 10.15 percent after the recovery of global risk appetite.
"The market was calm in morning trade. After the ECB news, yields fell sharply. We saw foreign inflows continuing. There were also small profit-taking moves. However, there were no aggressive buyers on the market. Volumes are very low," said a fixed income trader of a bank, adding the market was now looking ahead to November inflation data on Monday at 0800 GMT.
The Turkish Central Bank said this week in a summary of its latest policy meeting that rapid increases in unprocessed food prices and base effects would result in a marked rise in annual food price inflation during the last two months of the year. Analysts forecast the November consumer price index will rise 1.20 percent on the month after a 3.27 percent rise in October. On dollar bond markets, Turkey's share of the EMBI Global index narrowed 2 basis points to 340 basis points over US Treasuries.
By 1512 GMT, the lira traded at 1.8227 versus the dollar, slightly stronger than its after-hours level of 1.8292 on Thursday. On a weekly basis, the currency strengthened nearly 3 percent versus the greenback. Against a euro-dollar basket the lira was at 2.1395 compared with a previous close of 2.1414, and nearly 2.1 percent stronger on a weekly basis. "Primary dealers borrowed nearly 13 billion lira from the central bank. I think the lira could firm to 1.80 versus the dollar and to 2.10 versus the (euro-dollar) basket under these conditions," he said.
As lira liquidity remained tight, Turkish primary dealers borrowed 13.558 billion lira ($7.42 billion) from the central bank's repo facility on Friday. Turkey's main share index closed up 1.79 percent at 54,769.25 points, largely outperforming an emerging markets index which was up 0.31 percent.