ISTANBUL: Turkey's lira recovered slightly on Monday after the central bank doubled the size of its daily forex auction to counter volatility brought on by speculation about a rise in U.S. interest rates next year.
The lira earlier fell to its weakest since October 16 against the dollar, in line with the U.S. currency's gains globally, after Friday's U.S. jobs figures bolstered the case for a rise in U.S. interest rates next year.
The Turkish central bank said it would increase the volume of its daily forex auctions to $40 million from Tuesday. It also sold $40 million at its Monday auction to support the lira.
The lira firmed to 2.2685 by 1548 GMT after the central bank's announcement, outperforming other emerging markets currencies.
Turkey would be especially vulnerable to a rate increase in the world's largest economy, because it depends on foreign capital inflows to finance a mammoth current account deficit, its main economic handicap.
Istanbul's main share index closed down 0.49 percent at 84,818.68 points, slightly outpacing the main emerging markets index, which was down 0.6 percent.
The benchmark 10-year government bond yield rose to 8.18 percent from 8.11 on Friday.
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