July 16, 2012 / 9:28 AM / 5 years ago

Turkish markets steady, eyes on rate meeting

ISTANBUL, July 16 (Reuters) - Turkey's lira firmed and bonds
were steady on Monday, unmoved by jobs and budget data as
investors readied for central bank events at home and abroad
later this week.
    Ratesetters from the Turkish central bank meet on Thursday,
with markets seeking direction on policy given growing
expectations that secondary local interest rates could fall
soon.
    The lira firmed to 1.8125 to the dollar, having
traded at 1.8136 late on Friday. Against its euro-dollar basket
 the lira traded at 2.0137 from a previous 2.0167.
    Finance Minister Mehmet Simsek said the government could
take additional measures to rein in the fiscal gap after data
showed the budget was 6.3 billion lira in deficit in June after
a surplus of 4.59 billion lira in May.
    Analysts have said year-end budget targets may be at risk
from slowing tax revenue as economic growth slows.
    Unemployment, meanwhile, eased to 9 percent from March to
May, compared to 9.9 percent both in the previous three months
and the corresponding period of 2011, the statistics institute
said.
    The data had little impact on markets, which focused on
possible hints of further U.S. economic stimulus in testimony
this week from U.S. Federal Reserve Chairman Ben Bernanke.
    Some believe monetary policy easing is also imminent in
Turkey, following comments earlier this month from Central Bank
Governor Erdem Basci that the bank may cut its year-end 6.5
percent inflation forecast in July. 
    "Given the recent lira appreciation and easing decisions by
other central banks, (a narrowing of the interest rate corridor)
is certainly on the table this week," Basak Karaaslan, an
economist at Finansbank, wrote in an e-mailed note.
    The corridor is the difference between the bank's overnight
borrowing rate, at 5 percent, and its lending rate, at 11.5
percent. 
    The bank is not expected to cut its main policy rate, the
one-week repo rate, this week from its current record low of
5.75 percent.
    The yield on the March 5, 2014, benchmark bond
 was unchanged at 7.95 percent.
    Turkey's main share index rose 0.17 percent to
62,767.56 points, roughly line with a 0.11 percent rise in the
MSCI emerging markets index.

 (Writing by Ayla Jean Yackley; Editing by John Stonestreet)

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