Turkish lira at 2-1/2-month high vs dollar on IMF deal, global sentiment

The lira rose more that 1 percent against the dollar and traded slightly below 1.60 levels, recording a 2-1/2-month high in morning trade.

 

The yield on the benchmark bond maturing on Nov. 3, 2010, fell to 3-year low below 13.50 percent, as the benchmark Istanbul Stock Exchange rose 1 percent and traded above 27,000 levels.

 

Turkey and the IMF agreed Thursday to resume talks on a new loan deal to help the country weather the global downturn, after a meeting between Turkish Prime Minister Tayyip Erdogan and the head of the IMF, Dominique Strauss-Kahn, on the sidelines of the G-20 Summit in London.

 

Erdogan said his meeting with the IMF officials was very positive and that they would invite the IMF delegation to Turkey.

 

Turkey and the IMF began talks in January for a fresh loan deal after Ankara successfully completed a three-year, $10 billion stand-by deal in May.

 

Turkey announced at the end of January that it had reached an outline agreement with the IMF on a new loan plan but said differences remained and that the sides would take a break in negotiations to complete technical works.

 

Analysts see the decision as an important step for the possible loan deal with the Fund. "Reaching an agreement for the resumption of talks between Turkey and the IMF, which was suspended due to disagreements in January, reveals that a possible stand-by deal is very close," Fatih Keresteci, an HSBC strategist, said in a research note.

 

Rising global sentiment

 

The rising sentiment in global markets as investors cheered a pledge by world leaders to step up efforts to fight the global economic downturn also helped the lira gain ground.

 

"The decisions announced during G-20 Summit, particularly the serious rise in the amount of IMF sources, is an important positive signal for emerging markets' economies," Keresteci also said.

 

While the summit stopped short of unveiling fresh fiscal spending to tackle the slump, it did provide for more than a $1 trillion of new money to help poorer countries, in addition to moves to increase global regulation.

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Although many admit the steps will not scoop the world out of recession immediately, markets were relieved that the leaders had at least managed to set aside their earlier differences over how to tackle the crisis.