ISTANBUL: The Turkish lira weakened versus the dollar on Monday as the greenback strengthened broadly on global economic concerns while government bond yields rose nearly 20 basis points due to profit-taking in a low volume market.
The euro, hurt by fears of European sovereign ratings downgrades, remained under pressure after its worst weekly performance in three months. The safe-haven dollar also got support on uncertainty after the death of North Korean leader Kim Jong-il.
By 0910 GMT, the lira stood at 1.8868 versus the dollar, weaker from 1.8805 on Friday afternoon. The currency has lost nearly 18 percent against the greenback this year.
"Today, the move of the euro-dollar exchange rate remains a determinant for the lira. We see the dollar recovering globally as investors remain concerned about a concrete long-term EU debt solution, which also affects negatively the lira's value," said a manager of the treasury marketing unit of a big local bank.
"We can see the lira hitting 1.90 versus the dollar if the euro weakens further versus the dollar," he added.
Against a euro-dollar basket the lira traded at 2.1716, virtually flat compared with a previous close of 2.1698.
The yield on Turkey's new benchmark bond maturing on Dec. 4, 2013 stood at 10.46 percent, higher from Friday's close at 10.29 percent.
"The negative international investment sentiment and some foreign investors selling due to profit taking on the bond market pushed yields up. We see year-end effects on the market, volumes are extremely low," said a bond trader of a bank in Istanbul.
Investors attention are now turned to the monthly central bank meeting on Thursday. The bank is expected to keep its key rates on hold.
Istanbul's main share index was down 0.19 percent at 51,567.34 points, outperforming the MSCI emerging markets index, which was 1.45 percent down.
"We foresee 51,100 to serve as first line of support for shares, while 50,000 may also be in play in the coming sessions. Low volumes should continue in the market due to the lack of domestic newsflow and low foreign participation," wrote analysts at Ekspres Invest.
Shares of power group Akenerji, partly owned by Turkey's Akkok and Czech CEZ declined as mush as 4.65 percent on Monday after Akkok said Akenerji sale process halted due to insufficient bids.
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