ISTANBUL, Oct 21 (Reuters) - Turkey’s financial markets rose on Monday after a week-long holiday with investor attention focused on Wednesday’s central bank meeting where interest rates were expected to be left on hold.
The Turkish lira firmed to 1.9710 against the dollar by 0710 GMT, compared with 1.9835 last Monday before the Muslim Eid al-Adha holiday, largely reflecting changes on other major emerging markets over the past week.
Market sentiment has been boosted by expectations that the Federal Reserve will put off winding back its cheap money policies until next year as a result of continuing conflict over fiscal policy in Washington.
“We take the view that the change in expectations regarding Fed policies will have a positive impact on Turkish financial markets,” said HSBC strategist Fatih Keresteci.
He forecast that the lira could test its 100-day average around 1.96 against the dollar this week.
The central bank’s monetary policy committee was meeting on Wednesday and no changes were expected in key interest rates or reserve requirement ratios.
The 10-year benchmark bond, which closed with a yield of 8.74 percent on Oct. 11 before the public holiday, stood at 8.52 percent on Monday.
The main Istanbul share index was up 2.36 percent at 78,034.73 points, outperforming a 0.06 percent fall on the broader emerging markets index.
Turkey’s central bank was not holding its usual fixed-rate, one-week repo auction on Monday in line with a policy of additional monetary tightening to counter excessive forex market volatility. (Writing by Daren Butler; editing by Patrick Graham)