Turkish bond yields inch up ahead of Central bank meeting

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Turkish bonds yields inched up on Thursday, helped by speculation the central bank will shy away from another cut in interest rates at its meeting next week.

Shares in one of the world’s more robust emerging economies edged higher, outperforming peers, but the lira fell, largely due to the broadly negative tone to European markets due to concerns over Cyprus.

The yield on the two-year bond edged up to 6.21 percent from Wednesday’s close at 6.18 percent. It hit its highest level since early January of 6.24 percent on Wednesday.

“Expectations that the central bank would cut its rates have partially faded. This pushes the yields up,” said Suha Yaygin, an emerging markets trader at TD Securities.

“There are also some investors pocketing gains after the yields hit record lows in February,” Yaygin said.

The two-year benchmark yield hit its lowest ever level of5.63 percent on Feb. 19, after the central bank cut overnight borrowing and lending rates to avoid an over appreciation of the lira.

By 08:46 a.m. GMT, the lira stood at 1.8198 to the dollar, from 1.8173 late on Wednesday. Against its euro-dollar basket it firmed to 2.0832 on Wednesday from 2.0857 late on Wednesday.

The central bank meets on March 26. It has been easing policy since the middle of last year to counter a slowdown in economy but recent weakness of the lira has reduced the likelihood of more cuts in official rates, analysts said.

The lira hit on Tuesday its weakest level since Sept. 5 of 1.8271 to the dollar, mainly due the global sell-off in emerging markets.

Istanbul’s main share index was up 0.44 percent at 82,524 points, outperforming a fall of 0.22 percent in the global emerging markets index.

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