Turkish c/a deficit worries markets

ISTANBUL (Reuters) – Turkish shares and bonds weakened yesterday as investors continued to worry about the spike in crude oil prices and the gaping current account deficit, brokers said. The main share index ended down 0.7 percent at 18,775.46, extending a loss of 2.5 percent on Wednesday. Trading volume declined sharply to 415.1 trillion lira ($284.2 million) from 663.8 trillion a day earlier. «The short-term upward trend was broken after the index fell below 19,000 points yesterday. There is no expectation to turn the trend upward again and crude oil prices are continuing at high levels,» said Koc Portfolio’s Ersoy Erkazanci. «The index may continue flat in a range between 18,000-19,000 for some time more,» Erkazanci said. Yields on the new benchmark February 22, 2006 bonds rose to 25.11 percent from 24.99 percent on Wednesday. The bonds had an average yield of 25.05 percent at their auction on Tuesday. The lira firmed slightly to 1,458,000 against the dollar from 1,461,000 on Wednesday. The markets focused on concerns about the current account as Deputy Prime Minister Abdullatif Sener said yesterday Turkey had raised its year-end deficit target to $10.8 billion from an previous $7.6 billion. Central bank figures on Tuesday showed the current account gap had almost doubled in the first half to $9.95 billion from $5.09 billion in the first half of 2003. The International Monetary Fund warned this week that the deficit posed risks to the country’s economy, although it also said Turkey’s macroeconomic conditions were «at their best in decades.» But analysts said the widening deficit was still manageable and related risks were tolerable as long as the government stuck to the right policies.

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