ECONOMY

In Brief

Turkish central bank launches currency auctions ISTANBUL (Reuters) – The Turkish central bank yesterday launched foreign currency auctions that will sell $50 million daily to restore foreign exchange liquidity after a sharp slide in the lira’s value. The bank also said it could intervene directly in the market to sell foreign currency in the case of excessive exchange rate volatility. Analysts welcomed the move but said the volume was low. The bank, which left its key overnight borrowing rate unchanged this week, has come under pressure to act to shore up Turkey’s battered currency. In the first auction, it sold all $50 million on offer at a maximum price of 1.7041 lira, with bids totaling $128 million, central bank data showed. The morning announcement that it was starting the auctions gave an initial brief boost to the lira, which has lost a third of its value against the dollar this month. Bulgaria approves higher bank deposit protection Bulgarian lawmakers approved the first reading of a law that will raise the minimum guarantee on household deposits to 50,000 euros ($62,800), in line with an agreement by European Union finance ministers. The amendment to the Bank Deposit Guarantee law, approved by the Sofia-based legislature yesterday, increases the level from a previous 20,000 euros. It also includes guarantees for debt instruments issued by commercial banks, interbank loans and pension fund reserves held at the central bank. Bulgaria’s deposit insurance fund, which covers 90 percent of the nation’s total deposits, was set up after a 1997 banking crisis. (Bloomberg) Petkim targets Turkish petrochemical producer Petkim will not change its 2008 targets despite lower oil prices and weaker demand, the company’s chief executive told Reuters in an interview yesterday. Lower petrochemical demand will be compensated for by a weakening lira, which will help boost exports, said Petkim CEO Kenan Yavuz. The lira has lost a third of its value against the dollar since the beginning of the year. The company forecasts $2.5 billion in revenues for 2008, but Yavuz declined to comment on its 2009 outlook. «Revenue is totally related to the exchange rate. For us and for our customers, this is a positive development. There is no issue of changing targets,» Yavuz told Reuters in an interview. «There has been an extraordinary fall in petrochemical prices because there is fall in petrol prices and demand, but the rise in the exchange rate will compensate for that fall in demand,» he said. (Reuters) Leu to weaken Merrill Lynch & Co said it expects the Romanian leu to weaken against the euro as the global financial crisis cuts investor appetite for higher-yielding emerging-market currencies. «We open a long euro-leu position,» Merrill said in a client note dated yesterday. «The fundamental picture suggests that Romania may face a currency crisis in the near term, similar to what Hungary has gone through over the past week.» The leu dropped 3.5 percent to 3.7231 against the euro mid-session in Bucharest. Merrill targets the euro-leu exchange rate at 3.90, according to the note. (Bloomberg)