ISTANBUL: The Turkish lira recovered slightly versus the dollar on Monday following early losses after the central bank said it would sell a maximum $50 million in its daily forex auctions, while markets were focused on the bank's policy statement for next year.
Shares rose and bond yields closed up 8 basis points in very thin trading volumes.
The central bank said on Monday it will sell a maximum amount of $1.35 billion in daily forex auctions until its next monetary policy meeting. But if there are no exceptional conditions affecting financial and price stability, the central bank said it would limit daily sales to $50 million.
By 1525 GMT, the lira traded at 1.8910 versus the dollar, after weakening to as much as 1.8975 following the central bank's statement, and compared with 1.9005 on Friday afternoon. The currency weakened 0.6 percent versus the dollar last week, mainly due to lower-than-expected central bank forex auctions.
"Foreign investors were off today and we didn't see any local companies buying dollars. There were very few local investors trading on the market, volumes are very thin. We will monitor the central bank's statement tomorrow," said a treasury marketing unit manager of a bank.
Turkish markets will monitor central bank governor Erdem Basci's announcement on Tuesday about the bank's monetary and exchange rate policy for next year. The bank is expected to stick to its unorthodox policy mix and inflation targets in 2012.
Against its euro-dollar basket the lira traded at 2.1816, compared with a previous close of 2.1829.
The yield on Turkey's new benchmark bond maturing on Dec. 4, 2013 closed at 10.51 percent, up from a previous close of 10.43 percent.
Despite the current steadiness due to thin volumes, yields could increase in January as the Turkish treasury has a heavy volume of redemption, analysts said.
The Turkish treasury is planning a debt redemption of 17.8 billion lira ($9.37 billion) in January versus a domestic borrowing of 15 billion lira through six auctions.
Istanbul's main share index closed 1.09 percent up at 52,517.25 points, outperforming the MSCI emerging markets index, which was down 0.01 percent.
Markets shrugged off data showing the December capacity utilisation rate had decreased to 75.5 percent. Manufacturing confidence also fell to 97.2 points.
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