ISTANBUL: Turkish bond yields inched up in thin trade on Thursday, extending gains two days after a less aggressive than expected monetary easing by the central bank, while the lira fell against a globally stronger dollar.
By 0846 GMT, the lira weakened slightly to 1.7838 from 1.7816 late on Wednesday. Against its euro-dollar basket, the Turkish currency firmed to 2.0718, from 2.0724.
The yield on the two-year benchmark bond stood at 5.94 percent, a touch higher than Wednesday's close at 5.91 percent.
It has fallen around 550 basis points since the start of the year as inflation has fallen and the central bank cut interest rates inflation, with last month's move by rating agency Fitch to raise Turkey to investment grade also a factor.
"The selling pressure (on bonds) which started after the central bank left unchanged its interest rate corridor and cut only its policy rate, continued in thin trade. Short-term bond yields are more affected," wrote Burak Maldar, a vice president at Halk Invest.
"We expect the (two-year) benchmark yield to continue to rise in intraday trade with year-end profit taking."
Turkey's central bank cut its policy rate by 25 basis points to 5.5 percent on Tuesday, but kept its overnight borrowing rate unchanged at 5 percent. Analysts were also expecting the bank to cut this rate at least by 25 basis points.
Istanbul's main share index was up 0.54 percent at 77,225 points, outperforming a fall of 0.17 percent in the global emerging markets index.
"Today further weakness can be seen in line with the global markets yet 76,000 support is likely to hold," wrote analysts at Ata Invest.
Center>Copyright Reuters, 2012
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