In the latest such support, the European Bank for
Reconstruction and Development (EBRD) said on Thursday that it
will invest up to 1.5 billion euros ($1.6 billion) in the next
two years.
The lira lost some 30% of its value against the
dollar in 2022 and 44% the year before.
It is likely to hover around 19 to the dollar until the end
of the election cycle, largely thanks to forex interventions,
but would likely decline further in the long term if Erdogan
wins the election, Wells Fargo said in a note.
Under a scenario where the opposition wins, the lira would
rally sharply due to more conventional policy, potentially
firming up to 20% by the end of the second quarter, the bank
said.
Turkey's international bonds also came under pressure with
longer-dated issues falling around half a cent in the dollar,
according to Tradeweb. The premium investors demanded to hold the country's
hard-currency bonds over safe-haven U.S. Treasuries has risen
sharply over the past two sessions, adding 18 basis points to
rise to 446 bps since hitting a two-month low on Tuesday. (Reporting by Nevzat Devranoglu and Ali Kucukgocmen;
Additional reporting by Karin Strohecker in London;
Editing by Jonathan Spicer, Kim Coghill, William Maclean)
(Adds details of eurobond sale)
ANKARA, March 9 (Reuters) - Turkey's lira weakened to a
fresh record low of 18.9620 against the dollar on Thursday, as
investors weigh the economic impact of massive earthquakes that
hit the country last month.
Presidential and parliamentary elections scheduled for May
14 are adding to uncertainty. They will determine whether Turkey
continues with unorthodox policies under President Tayyip
Erdogan or reverts to orthodoxy as promised by the opposition.
Separately, Turkey's Treasury said on Thursday it had
borrowed $2.25 billion in a eurobond issue maturing in 2029,
bringing the amount it borrowed from international markets to $5
billion this year.
The yield to investor in the latest issue was 9.50%, down
from 9.75% in the eurobond issued in January, the Treasury said,
adding that demand was more than triple the amount issued.
More than a third of the amount issued was sold to investors
in the United Kingdom and more than 20% to those in the United
States, it said.
The lira has been largely stable since August thanks to
authorities' heavy hand in the forex market, including a decline
of about $9.4 billion in reserves since the first quake hit in
early February.
Dipping into reserves has been a regular feature of the
government's unorthodox economic policy in recent years,
especially since a historic currency collapse in late 2021.
The central bank replenishes its reserves in several ways,
including requiring exporters to sell a portion of revenues to
it. Authorities took several steps to cool demand for FX after
the earthquake, widening the spread in FX and gold trades.
Flows of international aid will help ease the pressure, many
bankers say, requesting anonymity due to sensitivity around
discussing state policy.
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