Turkish shares at highest since May 2013, lira stronger

ISTANBUL - Reuters

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Turkish shares rose to their highest level since May 2013 on July 23 and the lira hit its strongest level since mid-June.

The lira stood at around 2.091 against the dollar at midday, just off a high for the morning of 2.0933, its strongest since June 11. It stood at 2.1055 late on July 22.

Bankers see the 2.10 level as a crucial threshold for foreign exchange demand, adding that they do not expect it to stay at that level.

“Global risk sentiment continued to strengthen, with slightly lower U.S. core CPI strengthening expectations that the Fed will not hurry to raise rates,” TEB BNP Paribas strategist Erkin Işık said in a morning note.

“The market will be looking for clues on the [Turkish] Central Bank’s next action from Governor (Erdem) Başçı’s presentation.”

Başçı was set to address Parliament’s Planning and Budget Commission in a closed door meeting on July 23.

The main Istanbul share index rose 0.6 percent to 83,027 points on July 23, slightly outperforming the emerging markets index which rose 0.44 percent.

Gedik Investment said the stronger lira and growing risk appetite was driving the stock market higher, forecasting trade in a range of 84,000-85,000 after the break above 83,000.

The benchmark 10-year government bond yield also dipped to 8.87 percent from a close of 8.92 percent on July 22.

Meanwhile, Economy Minister Nihat Zeybekc forecast that Turkey’s current deficit - seen as the Turkish economy’s main weakness - would fall more than expected this year, speaking late on July 22. He predicted that the deficit will end the year below $50 billion at around 5.5 percent of gross domestic product if the growth in exports, output and employment continues.

Among stocks in focus was Akbank, up 0.6 percent, which was expected to announce second-quarter results later. Leading mobile phone operator Turkcell, unchanged at 13.2 lira, is also due to announce results after the close.

Euro drops against dollar

Meanwhile, the euro touched multi-month lows against the dollar and yen on July 23, as investors fret about the impact on the eurozone economy with potential fresh sanctions facing Russia following the downing of Flight MH17.

The euro is facing selling pressure as investors worry that another round of sanctions on Russia will have a knock-down effect for the eurozone.

Moscow is facing fresh measures over its support of Ukrainian rebels who were accused of shooting down Malaysia Airlines flight MH17 last week. But with the eurozone heavily reliant on its giant eastern neighbor for energy supplies, there are fears the bloc’s already fragile economy could suffer as a result.