World Bulletin / News Desk
The central bank of Turkey has cut the amount of liquidity it gives to lenders in auctions of repurchase agreements, allowing Turkish benchmark bond yields to rise to its highest level in over two weeks.
As of 12:07 PM local time, the yield on two-year lira bonds increased by 19 basis points to 8%. This is the highest rate since 11 October, advancing for the fifth consecutive day.
However, the Turkish Lira dropped 0.4% to 2.0043 versus the Dollar, marking the eighth day of depreciation and hitting its lowest point since 1 October. This is the worst run fort he Turkish Lira since May 2002.
Furthermore, Turkey’s central bank reduced the amount of one-week repos offered today at the lowest rate of 4.5% to three billion Turkish Liras from four billion Turkish Liras last week. According to Bloomberg, it also cut one-month repo funding by one billion Turkish Liras. The central bank has reduced the outstanding one-week repo funding stock from 11 billion Turkish Liras to 10 billion until the end of December.
“Limiting the amount of funding to 10 billion liras appears to cause an increase in the cost of funding, and we are seeing the first example of this in today’s auctions,” Ali Cakiroglu, an Istanbul-based strategist at HSBC Asset Management, told Bloomberg. Basci also added that the market shouldn’t expect an easing in monetary policy in the near future.
Despite the central bank’s 2013 target of 5% inflation, Turkey’s inflation rate has been higher throughout the year.Last Mod: 01 Kasım 2013, 14:21