Stock market gains, Turkish lira advances
Posted by meb at January 25th, 2008
The Turkish lira (YTL) advanced for a third day against the dollar as a rally in emerging-market equities stoked investor demand for higher-yielding assets.
The YTL rose against all 16 major currencies monitored by Bloomberg as Turkish stocks gained for the first time in 12 days.
The Istanbul Stock Exchange (IMKB) added 5.81 percent as central European shares rose, with the NTX Index climbing 3.5 percent. IMKB gained a total of 2,471.24 points yesterday, to close at 45,010.73 points.
“The markets offered a good pick-up,” said Barbara Nestor, an emerging-market currency strategist in London with Commerzbank AG, Germany’s second-largest bank. “Turkey is such a high-yielding market that it needs to be very convincing,” as negative news is likely to cause investors to pull out, she said.
The YTL gained as much as 0.0109 percent on Wednesday’s 1.1958 to stand at 1.1819 per dollar toward the end of the day.
However, “The YTL may weaken by the year’s end,” said Nestor.
“We still like the YTL in the medium-term. The equity-market correlation should be high” and a correction “should come at some point this year,” she said. Nestor forecasted the YTL at 1.125 per dollar at the end of the first quarter and 1.20 to the dollar at the end of the year.
Turkey’s 15.5 percent interest rate makes the YTL a popular purchase in carry trades, where investors borrow at low rates in Japan or Switzerland and convert the proceeds into a currency they can lend out for a higher return. They think the risk currency moves will erase their profit. Japan’s main lending rate of 0.5 percent is the lowest among industrialized economies.
Source: Turkish Daily News
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