Weak US jobs data gave Turkish bond prices and the lira currency a lift after both had been knocked earlier by data showing Turkey's inflation accelerating more quickly than expected. Several analysts said the sharp increase in the consumer price index in May should persuade the central bank to shift gear after the June 12 parliamentary election and increase interest rates.
The data sparked a 28 basis point jump in Turkey's benchmark bond yield, but it fell back after the weak US jobs data impacted global markets. The benchmark February 20, 2013 bond yield closed at 8.92 percent, compared with 8.75 percent on Thursday. The lira, which had also weakened on the inflation data, ended firmer at 1.5740 to the dollar, compared with 1.5870 on Thursday.
The consumer price index rose 2.42 percent month-on-month in May for a year-on-year rise of 7.17 percent, the Turkish Statistics Institute said. A Reuters poll of 17 analysts had forecast the month-on-month rise at 1.02 percent and annual inflation rising to 5.7 percent from 4.26 percent in April.
"Turkey needs fiscal and monetary policy to be more aggressively tightened now, or the risk is that we will see a more marked market correction," he added. The Turkish central bank has introduced an unorthodox policy combining lower interest rates to deter higher yield-seeking hot money, and higher reserve requirement ratios to absorb liquidity and contain credit growth.
The share market was more sedate, and Istanbul share index ended at 62,806.94, down 0.48 percent from Thursday. AKbank was a big mover, closing 3.77 percent weaker at 7.14 lira, after stakeholder Demir Sabanci said he had applied to sell 91.23 million nominal shares in the lender. The shares to be sold constitute 2.3 percent of Akbank's capital, and are worth 647.7 million lira ($410 million) calculated according to the current price of shares.