ISTANBUL: The Turkish lira weakened on Friday as worries over tighter liquidity kept it under pressure while investors shifted their focus to Turkish inflation data, which is expected to rise due to higher oil prices.
Turkish markets were closed on Thursday for a public holiday.
The lira weakened to 1.8182 against the dollar by 1046 GMT from 1.8156 on Wednesday. It eased to 2.0532 against the euro-dollar basket from 2.0494. T h e currency weakened to 1.8268 against the dollar earlier in the day on tighter liquidity worries, traders said.
The central bank injected 5 billion lira ($2.74 billion) in a one-month repo auction and 7.5 billion lira in a one-week repo auction into the market on Friday.
" The c entral bank continues to pump excess TRY liquidity i nt o the market and this eases the o/n rates, whi ch is aligned with (c entral bank Governor) Er dem Basci's comments last week, signallin g an attempt to be more dovish," said Cit igroup strategist Luis Costa.
"Today is the last day of the month and tax payments are expected to partially support the TRY, but the general sentiment towards the currency has somewhat deteriorated."
Yagiz Oral, assistant manager at HSBC Portfolio, said the lira' s easing to above 2.05 versus the euro-dollar basket s howed t here is n ot a supportive environment for the currency, but that the central b ank would start tightening if it went ab ove 2.08.
The yield on Turkey's two-year benchmark bond fell to 7.61 percent from 7.65 percent.
Istanbul's main share index rose 0.43 percent to 66,439.03 points, outperforming a 0.19 percent rise in the MSCI emerging markets index.
"Recent positive decoupling and today being contract expiry date may keep Turkish shares relatively stronger yet again. Upside target around 67.5k should the index break 66.6k," wrote EkspresInvest analysts in a note.
Markets showed no reaction to a narrowing trade deficit in July. The deficit shrank to $7.89 billion in July from $9.2 billion a year earlier, data showed, in line with a forecast gap of $7.9 billion in a Reuters poll.
Exports rose 8.5 percent and imports fell 1.5 percent.
The Turkish Statistics Institute will release inflation data for August on Sept. 3. A Reuters poll forecast a 0.25 percent rise for consumer price index month-on-month, and a year-on-year rise of 6.5 percent.
Investors cooled expectations that US Federal Reserve Chairman Ben Bernanke will offer any signal of a further monetary stimulus at a speech before fellow central bankers later in the day, hampering investor appetite for riskier emerging markets, like Turkey.
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