Turkish markets look to loan
ISTANBUL (Reuters) – Turkish markets traded largely evenly yesterday, holding recent gains driven by hopes of new international lending for Turkey’s crisis-wracked economy. Average yields on the busiest debt papers on the secondary market – bills maturing on April 3, 2002 – held under 80 percent at 79.70 percent, near to closing levels on Wednesday after cash from a treasury redemption pushed the purchase of new papers. The lira currency closed the day on the central bank market at 1,543,000 to the dollar, off lows of around 1,560,000 hit earlier in the day. Forex traders said the lira was helped by news that two of Turkey’s largest state enterprises were close to a deal analysts said would slacken market demand for safe-haven dollars. There was no heavy demand for dollars. The Tupras-Botas news in the morning had an influence in the fall [of the dollar against the lira], said one banker. Oil refiner Tupras and pipeline concern Botas told Reuters a deal to meet their foreign currency needs without tapping Turkey’s often thin currency markets could be reached with the central bank shortly. The lira currency has lost more than 50 percent of its value against the greenback since a financial crisis in February ripped through financial markets, making it difficult for crisis-hit firms to set prices and bolstering inflation. But analysts said press speculation that the lira might rise to as much as 1,400,000 against the dollar in the coming weeks was optimistic if current market dynamics are taken into account. Investors who sold dollars from last week may turn into buyers,so I expect the upside for the lira to be limited, said one Istanbul banker, who asked not to be named. Economy Minister Kemal Dervis has said on a number of occasions the lira is undervalued and predicts it will strengthen in 2002 once investors see Turkey’s economy as back on track. Stocks at a peak? Meanwhile stocks traded on the main Istanbul National-100 index closed the day 0.91-percent higher at 10,457.31 points. Brokers said the index may have peaked as hopes for extra foreign cash to plug a 2002 financing gap were already priced in. The main stock index has risen 39.45 percent since October 8, as expectations for the extra funding drove up prices. It can now be said the expectations of additional foreign loans and other developments are reflected in prices. There’s been a rise of almost 50 percent. Rises in the lira have supported this but now things have settled down, said Cem Marti of Ata Investment in Istanbul. An IMF team is in Ankara for talks with Turkish officials on an existing $19 billion IMF-led economic program and to consider the extra financing Turkey says it needs. Bond trade yesterday was well below a nominal 518.5 trillion lira ($337 million) in local paper that changed hands on Wednesday, the busiest trading since a 541-trillion-lira trading day in January. Trading in Turkish paper yesterday was bolstered by a 4,498-trillion-lira ($2.87 billion) treasury debt repayment, most of which was to the market, as investors switched some of that cash into Turkish lira assets. Turkish markets were little moved yesterday by government data showing industrial output slumping 9.2 percent year-on-year in September. The fall indicates little respite for Turkish manufacturers suffering the worst recession since 1945. Sales of automobiles in Turkey fell 74 percent in the first 10 months of the year, according to Turkish Automobile Association (OSD) data released yesterday.