Turkish lira eases in absence of central bank forex auction

Aygaz

25/07/2013 10:37

By Seda Sezer ISTANBUL, July 25 (Reuters) - The Turkish lira weakened on Thursday in the absence of a central bank foreign exchange auction to support the currency. The central bank announced on Tuesday that it would not sell foreign exchange on days when it applies additional monetary tightening by not holding its usual fixed-rate, one-week repo auction, as was the case on Thursday. By 0757 GMT the lira  TRYTOM=D3  had weakened to 1.9224 against the dollar, from 1.9130 late on Wednesday. The yield on Turkey's 10-year bond  tTR080323TVA=IS  rose to 8.85 percent from 8.75 percent on Wednesday.    The central bank raised its overnight lending rate to 7.25 percent from 6.5 percent on Tuesday in response to capital outflows that have knocked the lira down as much as 9 percent against the dollar over the past few months.  ID:nL6N0FT1S1  It signalled it would fight further lira falls by tightening liquidity rather than eating into its foreign exchange reserves. It has already burned through $6.7 billion, about 15 percent of estimated disposable reserves, this year to defend the lira. "It's an exceptional day today and the central bank said it will not hold a repo auction. The bank will not hold a forex selling auction. This may pressure the lira and markets," said Ali Cakiroglu, a portfolio manager at HSBC. The main Istanbul share index  .XU100  was down 1.88 percent at 72,656.71 points.  Shares of Koc Holding  KCHOL.IS  and its units Tupras TUPRS.IS  and Aygaz  AYGAZ.IS  declined after the government launched a tax probe.  ID:nL6N0FV15Q  Tupras shares fell more than 6 percent in early trading. Koc Holding and Aygaz also extended losses, dropping 4.5 percent and 4.17 percent respectively by 0812 GMT after closing down around 4 percent on Wednesday.  (Writing by Seda Sezer; Editing by Nick Tattersall/Ruth Pitchford) ((seda.sezer@thomsonreuters.com)(+90-212-350 7122)(Reuters Messaging: seda.sezer.thomsonreuters.com@reuters.net)) Keywords: MARKETS TURKEY/