Turkish lira eases in absence of central bank forex auction (updated)

Aygaz

25/07/2013 16:06

(Updates with closing prices) 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, while shares in Koc Holding KCHOL.IS  and its affiliated energy firms fell after the government launched a tax probe. 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 1429 GMT the lira  TRYTOM=D3  had weakened to 1.9240 against the dollar, from 1.9130 late on Wednesday. Turkish markets were down as rising U.S. yields also fanned concerns that the country's central bank may have to tighten monetary policy again to stem capital outflows, a move that would weigh on growth. Rising U.S. yields would lessen the appeal for emerging assets.  The yield on Turkey's 10-year bond  tTR080323TVA=IS  rose to 9.23 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 this year, about 15 percent of estimated disposable reserves, 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 0.22 percent at 73,849.74 points.  Shares in Koc Holding and its units oil refiner Tupras TUPRS.IS  and energy company Aygaz  AYGAZ.IS  declined after finance ministry tax inspectors raided their offices. ID:nL6N0FV15Q  Tupras shares fell more than 6 percent in early trading and closed 3 percent down. Koc Holding and Aygaz also extended losses, dropping 3.0 percent and 2.6 percent respectively. (Writing by Seda Sezer; Editing by Catherine Evans) ((seda.sezer@thomsonreuters.com)(+90-212-350 7122)(Reuters Messaging: seda.sezer.thomsonreuters.com@reuters.net)) Keywords: MARKETS TURKEY/