The Turkish lira extended gains on Friday and shares rose more than 1 percent following a recovery in global risk appetite after the Italian senate approved an austerity plan. Turkish markets shrugged off data showing industrial production jumped 12 percent in September from a year ago, double a Reuters forecast of 6 percent growth.
The lira extended its early gains and closed at 1.7770 against the dollar, firming from a previous interbank close of 1.7820. On a weekly basis the currency was 0.7 weaker in after-hours trade. The lira hit its weakest level in two weeks at 1.8060 against the dollar in early trade on Thursday as nervous investors fled to safer assets on rising eurozone debt worries.
"The lira continued to follow global risk appetite. Due to the US holiday, capital inflows were quite limited today. The Italian vote improved investors' optimism," said a forex trader at a bank in Istanbul. US bond markets were closed on Friday for the Veterans Day holiday.
The central bank injected 10 billion lira ($5.60 billion) into the market in a one-week repo auction on Friday while draining 22 billion lira ($12.3 billion) from markets. Against its euro-dollar basket the lira traded at 2.1045, a touch stronger compared with a previous close of 2.1145.
The main Turkish share index closed up 1.19 percent at 56,201.45 points, underperforming the emerging market index, which was up 1.72 percent. The yield on the benchmark July 17, 2013 bond closed at 9.92 percent, down from a previous close of 9.96 percent. Volumes continued to be very low.
Investors will monitor debt auctions next week. On Monday, the Treasury will issue a three-year bond and four-year CPI linker in tap. On Tuesday, it will issue a 20-month zero coupon bond and a four-year fixed coupon bond in tap. In November, the Turkish Treasury plans a domestic debt redemption of 13.4 billion lira ($7.5 billion) versus a domestic borrowing of 12.2 billion lira.
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