ECONOMY

Turmoil in Budapest weighs on Turkish lira and bonds

ISTANBUL (Reuters) – Turkish markets had mixed trade yesterday, with shares edging higher while the lira and bonds weakened in line with emerging market concerns about the political turmoil in Hungary. The Turkish lira weakened to above 1.4710 against the dollar in interbank trade before rebounding to close at 1.4670, still weaker than Monday’s close of 1.4600. The yield on the July 16 2008 benchmark bond rose to 20.38 percent from Monday’s close of 20.14 percent. «There’s no liquidity in the market, and the foreign currency market today is globally weaker because of what’s happening in Hungary,» said one banker. Rioters stormed through Budapest yesterday and Hungarian opposition leaders called on the prime minister to resign after a tape was leaked in which the prime minister said the government had lied about its budget. Uncertainty was also fueled by news that the European Union will publish its progress report on Turkey on November 8, rather than October 24 as previously planned. Turkey’s Parliament convened yesterday to push through reforms sought by the EU as part of the country’s bid to achieve membership in the bloc. «Overall the risks with regard to the Turkish investment environment still remain relatively high. Investors must stay on board but beware of the risks,» said Tera Stockbrokers Managing Director Emre Tezmen. Istanbul’s main share index closed up 0.26 percent at 38,345.10 points.