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Turkish bond yields rise as rate cut prospects dim

Published: Updated:

Turkish bond yields climbed on Tuesday as the government’s debt costs rose at two auctions, with investors expecting that the central bank will keep interest rates on hold next week rather than lower them further.

Turkey borrowed 3.88 billion lira ($2 bln) through two debt auctions at a higher yield than expected on Tuesday, completing its 9.67 billion lira March borrowing program.

The yield on the two-year bond closed at6.17 percent, up from Monday’s close at 5.99 percent, as depreciating lira fuelled expectations that rates would be left on hold when the monetary policy committee meets next Tuesday.

By 1602 GMT, the lira had eased to 1.8222 against a globally stronger dollar, from 1.8110 late on Monday. Against its euro-dollar basket it eased to 2.0846 from2.0789.

Istanbul’s main share index closed down 1.31percent at 82,286 points, underperforming a fall of 0.54 percent in the global emerging markets index.

The sell-off was led by banking shares which fell1.8 percent partly on the back of the higher bond yields, which reduce the value of banks’ bond portfolios.