Turkish lira hits five-week lows, focus on US data

ISTANBUL-Reuters

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Turkey’s lira weakened and was expected to remain volatile today as investors nervously eyed upcoming U.S. economic data for clues to when the Federal Reserve will roll back its bond buying program.

Global sentiment deteriorated as investors looked to the first reading of US third-quarter GDP data later today, which is expected to show that growth slowed a little in the third quarter.

But Friday’s US nonfarm payrolls data is the main focus for Turkish markets. The release is closely watched by markets trying to gauge when the Federal Reserve will be winding down its $85 billion-a-month bond-buying program, which is linked to falling unemployment.

“As global risk sentiment is extremely sensitive to (the) global backdrop, further volatility in the lira is more likely in the short-term, depending on US data and ECB meeting,” a research note from TEB said, referring to today’s European Central Bank meeting, which is not expected to result in a rate cut.

The lira weakened to 2.0355 to the dollar from 2.0315 late on Wednesday, having touched 2.04, its weakest level since September 30.

The main Istanbul share index rose 0.1 percent to 75,846 points, outperforming the broader emerging markets index, which fell 0.18 percent.

Turkey’s 10-year benchmark bond yield rose to 8.95 percent from 8.91 percent late on Wednesday.

Turkish bonds and the lira have been volatile in recent months on speculation about when the Federal Reserve would start scaling back its stimulus, with Turkey’s large current account deficit making it more vulnerable to expected capital outflows.