ISTANBUL: Turkey's lira held steady after the central bank offered cheap liquidity against the dollar on Tuesday, while bond yields inched down in the wake of benign inflation data and equities closed flat in thin trade.
By 1457 GMT, the lira traded at 1.8473 versus the dollar , close to its level of 1.8471 late on Monday. Against its euro-dollar basket it traded at 2.0725, from 2.0770.
"The lira traded in a narrow band. The currency has slightly weakened mainly due to the central bank decision to provide cheaper liquidity and the slowdown in the drop of commodity prices," said a forex trader.
The decline in oil prices is considered positive for Turkey, as it reduces the country's external risks related to its huge current account deficit, which stood at 10 percent of its gross domestic product last year.
"Markets will monitor the European Central Bank meeting and the US Federal Reserve Governor speech," the trader said.
The Turkish Central Bank opted to provide lira liquidity to markets through a cheap repo auction where the rate was fixed at 5.75 percent.
Last week the central bank held a more expensive intraday repo, charging borrowers a higher rate, to help the lira recover from 1.88 per dollar, its weakest rate since mid-January.
The yield on Turkey's benchmark bond maturing on March 5, 2014, closed at 9.20 percent from a previous close at 9.25 percent. Traders said more favourable inflation outlook boosted the bond market.
Istanbul's main stock index closed 0.1 percent up at 55,799 points in thin trade, underperforming a 0.80 percent rise in the MSCI emerging markets index.
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