June 25, 2014 / 4:02 PM / 3 years ago

Turkey's lira, stocks reverse losses as weak US GDP spurs hopes for inflows

2 Min Read

ISTANBUL, June 25 (Reuters) - Turkey's lira and stocks reversed its losses on Wednesday after a big downward revision to U.S. economic data raised analysts' expectations of continued loose monetary policy and cash inflows into emerging markets.

U.S. gross domestic product fell at a 2.9 percent annual rate, instead of the 1.0 percent reported last month, showing that the U.S. economy had contracted at a much steeper pace than previously estimated.

The Turkish lira was at 2.1327 by 1523 GMT versus 2.1401 earlier on Wednesday. The main Istanbul share index reversed its earlier losses to close flat at 78,997.88 points.

The U.S. data revision could prompt the Federal Reserve to postpone its expected interest rate hikes, which would be a positive for emerging markets like Turkey, Serdar Pazi from Finansinvest said. "We have seen a rise in emerging markets following the revision," Pazi said.

Concerns about escalating violence in neighbouring Iraq continued to keep a lid on the Turkish lira. The finance minister warned that the crisis in Iraq, Turkey's second-largest export market, is likely to weigh on Turkey's current account deficit, the country's main economic weakness. (Writing by Humeyra Pamuk; Editing by Hugh Lawson)

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