ISTANBUL Jan 14 Turkey's lira weakened to near
record lows on Tuesday after data showed the current account
deficit had widened in November.
A corruption inquiry shaking Turkey's government, along with
U.S. plans to scale back its massive stimulus programme, have
weighed on the lira, knocking it down more than 7 percent since
mid-December, when the graft scandal first emerged.
The deficit widened to $3.94 billion in November from $2.89
billion a month earlier, narrower than had been feared but not
enough of an improvement to cheer the market.
The lira weakened to 2.1911 against the dollar
by 0820 GMT from 2.1800 earlier in the morning.
"I guess this just affirms that the pace of improvement is
just not moving fast enough to quickly eradicate concerns over
Turkey's key Achilles heel, the current account deficit," said
Timothy Ash, head of emerging markets research at Standard Bank.
"The lira looks set to go weaker still until the central
bank opts to tighten monetary policy in a more meaningful way."
Turkey depends on cheap capital inflows to finance its
current account deficit, running at around 7 percent of GDP,
leaving it particularly exposed to any slowdown in inflows
triggered by scaling back of the U.S. Fed's bond buying.
Despite the lira's decline, the central bank has so far
refused to hike rates, instead opting to tighten monetary policy
through cancelling repo auctions and trying to support the
currency through dollar sales.
The main Istanbul index was down 1.29 percent at
67,186 points, compared with the main global emerging market
index which rose 0.51 percent.
The yield on Turkey's 10-year benchmark bond
fell to 10.01 percent from 10.04 percent late on Monday.
(Editing by Nick Tattersall/Jeremy Gaunt)