ISTANBUL Nov 27 Turkish bond yields hit record
lows on Tuesday on expectations of more rate cuts, further
fuelled by a central bank forecast that inflation would drop to
the bank's target level next year.
The lira was trading a touch stronger and shares were just
The yield on the two-year benchmark bond
closed at 6.05 percent, after hitting an all-time low of 6
percent. It closed on Monday at 6.12 percent.
The central bank has indicated it could cut its overnight
borrowing rate and the one-week repo rate - its main policy rate
- to rein in the strengthening lira, having cut its overnight
lending rate last week for the third consecutive month.
In an interview with Reuters in Helsinki on Tuesday, Ahmet
Faruk Aysan, a member of the bank's rate-setting monetary policy
committee, reiterated the possibility of a measured cut in the
Aysan also said inflation at end-2012 would likely be below
the bank's latest forecast of 7.4 percent and that its target of
five percent in 2013 was "definitely achievable".
Analysts said yields fell on prospects of lower inflation
and an easier monetary policy outlook, which would cut lira
funding costs for banks and allow them to buy more bonds.
By 1530 GMT, the lira was at 1.7925 to the dollar
, slightly firmer than 1.7931 late on Monday. Against
its euro-dollar basket it strengthened to 2.0544
Istanbul's main share index closed up 0.18 percent
at 71,999 points, underperforming a 0.21 percent rise in the
global emerging markets index.
Shares in Garanti Bank were down 0.95 percent at 8.30 lira
after General Electric's Turkish subsidiary GE Arastirma
ve Musavirlik applied to sell a 39 million lira ($22 million)
stake in the bank.