The Turkish lira fell around 1 percent on Friday as investors sold on profit taking after a five-week rally while shares fell to their lowest level since early February after Akbank, one of the biggest Turkish lenders, posted lower-than-expected net profit for last year. By 1548 GMT, the lira traded at 1.7660 versus the dollar compared with 1.7553 in late trade on Thursday. The lira had hit a five-month high of 1.7401 on Wednesday.
Against its euro-dollar currency basket, the lira stood at around 2.0466, a touch weaker than 2.0437 in late trade on Thursday. "The lira has been rallying since the start of 2012 mainly due to a tight monetary policy and rising global risk appetite. Today we saw some investors selling for profit taking following the news about the Greece deal," said a forex trader of a bank in Istanbul.
Global risk appetite deteriorated after the leader of the far-right party in Greece's coalition declined to back a bailout agreement, raising new concerns about the risk of a chaotic default. Turkey's lira hit its weakest ever level of 1.9215 versus the dollar in late December, pushing the central bank to intervene directly in the forex market by selling $2.9 billion and increasing the upper limit of its daily forex selling auctions as much as to $1.35 billion.
The Turkish central bank launched the daily forex selling auctions on August 5 to support the ailing lira which weakened roughly 20 percent versus the greenback in 2011. The main Istanbul share index closed 1.38 percent down at 59,332.11 points, outperforming the MSCI emerging markets index which was 1.85 percent down.
Shares dipped on the back of banking shares which closed down 2.19 percent as Akbank posted lower-than-expected profit in Q4. The Treasury plans to borrow 14 billion lira ($8 billion) from the domestic market compared with redemption of 16.4 billion lira in February. The first auction will be a tap of a zero-coupon bond with a 13-month maturity on February 13. Investors usually sell bonds ahead of Treasury auctions to bid in a lower rate.
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