ISTANBUL: Turkey's benchmark bond yield hovered near record lows on Wednesday, a day after the central bank cut rates more deeply than expected to deter hot money inflows and stimulate growth.
The central bank cut each of its main rates by 50 basis points, lowering its one-week repo policy rate to 5.0 percent, its overnight borrowing rate to 4.0 percent and its overnight lending rate to 7.0 percent.
The yield on Turkey's two-year benchmark bond fell to 5.57 percent, from a close at 5.58 percent on Tuesday. The bond yield dropped below 5.50 percent to a record low shortly after the central bank decision on Tuesday.
"The dovish bias of the central bank was even more pronounced than we expected and we cannot rule out further rate action in the upcoming term, especially if economic activity does not revive," said TEB BNP-Paribas strategist Erkin Isik.
In a presentation on Wednesday, the bank said its liquidity policy would remain flexible in the face of strengthening but volatile capital flows. But it was relaxed on the outlook for inflation and the current account gap, saying lower global commodity prices would dampen further rises.
The lira firmed to 1.7870 to the dollar by 0649 GMT from 1.7920 late on Tuesday. Against its euro-dollar basket it eased to 2.0729.
Istanbul's main share index rose 0.43 percent to 85,071.56 points, outperforming a rise of 0.32 percent in the global emerging markets index.
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