Lira swings and Turk­ish bonds gain af­ter court frees US pas­tor

Gulf Times Business - - FRONT PAGE -

The lira swung be­tween gains and losses af­ter a Turk­ish court freed a US pas­tor af­ter a two-year-long de­ten­tion, paving the way for a thaw in ties with Wash­ing­ton. Bonds and stocks gained.

The lira was ex­pected to ex­tend an ad­vance on the re­lease of An­drew Brun­son, yet in­vestors held fire af­ter a five-day rally fu­elled by spec­u­la­tion his re­lease was im­mi­nent. The pas­tor was sen­tenced to more than three years in jail but freed on time served, over his al­leged in­volve­ment in a 2016 coup at­tempt.

“I was ex­pect­ing the lira to ap­pre­ci­ate a bit and then dollar-lira to hit a rock bot­tom in the com­ing days,” said Cris­tian Mag­gio, the head of emerg­ing mar­ket re­search at TD Se­cu­ri­ties in Lon­don. “While things can still de­velop in that di­rec­tion, the ab­sence of a knee-jerk re­ac­tion sug­gests that dollar-lira had al­ready all the good news in the price.”

An un­prece­dented diplo­matic break­down be­tween the Nato al­lies over the case com­pounded an al­most 40% de­pre­ci­a­tion in the cur­rency this year. The US im­posed sanc­tions on Turkey over Brun­son’s con­tin­ued de­ten­tion in Au­gust, and his re­lease and could go some way towards restor­ing bat­tered in­vestor con­fi­dence, stem­ming an out­flow of for­eign cap­i­tal.

The lira was lit­tle changed at 5.9258 per dollar, af­ter gain­ing as much as 1.6% ear­lier to its strongest level in two months. The cur­rency’s dep­re­ca­tion this year gave way to the fastest in­fla­tion in 15 years, piled pres­sure on com­pa­nies reel­ing un­der for­eign-cur­rency debt load, and forced the cen­tral bank into nearly dou­bling its bench­mark rate to con­tain the rout.

The yield on 10-year govern­ment bonds fell as much as 105 ba­sis point to 19.02% a more than one-week low.

The Borsa Is­tan­bul 100 In­dex rose 1.5% led by gains in steel maker Eregli Demir ve Ce­lik Fabrikalari TAS.

Dig­i­tal screens dis­play stock prices at the Borsa Is­tan­bul (file). The Borsa Is­tan­bul 100 In­dex rose 1.5% led by gains in steel maker Eregli Demir ve Ce­lik Fabrikalari TAS.

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