ISTANBUL: The Turkish lira drifted lower on Monday as investors trod cautiously ahead of Tuesday's central bank inflation report, and risk appetite waned anew as oil prices tumbled again.
The lira stood at 3.0116 against the dollar at 1133 GMT, just firmer than 3.0130 in late Friday afternoon trade, but off a high of 2.9998 overnight. It hit an all-time low of 3.0750 against the U.S. currency in September.
A senior adviser to Turkish President Tayyip Erdogan was sanguine about the lira on Monday, saying it was "impossible to assess negatively" until it traded at 3.05-3.07 to the dollar.
The adviser, Yigit Bulut, told state broadcaster TRT that the central bank's refusal to change interest rates at its last meetings showed its independence from the U.S. Federal Reserve, which has raised rates.
The bank's quarterly inflation report on Tuesday was not expected to yield any indications on policy changes after the bank kept interest rates on hold this month.
State-run Anadolu Agency's financial news unit AA Finans reported on its Twitter feed that central bank governor Erdem Basci had again said it was too early to begin simplifying policy, pointing to the high level of market volatility.
The bank has said it aims to simplify policy by narrowing the interest rate "corridor" between its overnight borrowing and lending rates, but Basci said on Thursday at the World Economic Forum in Davos that it was too early to do so.
TEB-BNP Paribas forecast the central bank would revise up by 1 percentage point to 7.5 percent its end-year inflation forecast, matching the government's medium-term programme.
"The message will likely to be keeping the current corridor policy until global risk sentiment strengthens significantly," TEB strategist Erkin Isik said in a daily note, referring to the "corridor" between its overnight borrowing and lending rates.
The main share index, which climbed 2.44 percent on Friday, gained another 0.72 percent on Monday to 70,758 points.
The Turkish Treasury sold a net 1,082.8 million lira ($359 million) of a four-year, fixed-coupon bond at a yield of 11.00 percent in a tap on Monday, data showed, just below a Reuters poll forecast of 11.01 percent.
It also sold a net 845.3 million lira of a new 10-year, CPI-indexed bond at a yield of 2.78 percent, below a forecast of 2.86 percent.
After the auctions, the yield on the benchmark 10-year government bond stood at 10.93 percent, down from 11.08 percent at the spot close on Friday.
Three more bond auctions are due on Tuesday.
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