Turkish assets traded mixed on Friday with the lira gaining on hopes that after unexpectedly strong growth in the first quarter the Turkish Central Bank will have to start hiking interest rates in the coming period. Bonds and stocks traded flat in thin trade. The lira closed at 1.6100 to the dollar from a previous close of 1.6230.
"Growth figures are positive for the lira, particularly if expectations of an interest rate hike dominate," a trader said. Turkey's gross domestic product grew 11 percent in the first quarter, data showed on Thursday, raising fears of overheating but also piling pressure on the central bank to abandon its dovish stance.
The lira hit a 26-month low on Monday on growing concerns about the bank's wait-and-see approach in the face of rising inflation, and widening external deficits. Global economic uncertainties, particularly surrounding Greece have also taken their toll. Turkey's benchmark February 20, 2013 bond yield closed at 9.15 percent, flat from Thursday's close of 9.14 percent. Markets are waiting on June inflation data due next Monday July 4.
According to the median forecast in a Reuters poll of 18 economists, the CPI index is seen falling 0.75 percent on the month after rising 2.42 percent in May. Annual inflation is seen at 6.96 percent, down slightly from May's 7.17 percent. Producer prices are seen gaining 0.2 percent on the month after a rise of 0.15 percent in May. Retail prices in Istanbul, Turkey's largest city, fell 0.66 percent month-on-month in June, while wholesale prices fell 0.26 percent, the Istanbul Chamber of Commerce said on Friday. The main Istanbul share index closed flat at 63,264, underperforming the emerging markets benchmark index which rose 0.85 percent.
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