Turkish assets fell on Friday after figures showed that consumer confidence had fallen to a year-low, raising concerns about the strength of the Turkish economy.
Turkey's consumer confidence index fell 6.6 percent to 72.1 points in September from 77.2 points a month earlier, with a number below 100 representing a pessimistic outlook. It is also the lowest level since September 2012.
"The consumer confidence doesn't have a great relationship to actual spending, but still it seems to be a sign that monetary tightening is feeding through to the economy," William Jackson from Capital Economics said. "The weakening of the lira has resulted in higher import prices, particularly of energy."
Turkish assets started their fifth consecutive day in decline on Friday.
The lira fell to 2.0370 against the dollar compared with 2.0150 late on Thursday. The 10-year benchmark bond yield rose to 9.24 percent from 9.09 percent on Thursday.
Istanbul's main share index was down 0.5 percent at 75,239 points by 0831 GMT, underperforming wider emerging market peers which were broadly flat.
Markets have been unnerved by the central bank's refusal to increase the policy rate, the cost of borrowing in its one-week repo auctions, in the face of an expected tapering of U.S. Federal Reserve asset purchases.
Turkey is thought to be one of the most exposed to an outflow in capital because of its large current account deficit, which runs at around 7 percent of GDP.
Instead, the bank is applying a complex mix of forex auctions and withholding repos to support the sliding lira, which fails to convince some economists. But others said the market really is tightening, citing rising interbank rates since May.
"Although markets have fallen a bit this week, it's not like the sell-off in August. Tightening is happening and the market is stabilising," Jackson said. ($1 = 2.0227 Turkish liras)
Turkey warns on growth as pressure on economy risesTurkey sent a new signal of pressures squeezing its economy on Wednesday, warning it may cut the growth outlook a day after a juggling act with ... Business
Turkey raises gold reserves by 23 tonnes in August, says IMFTurkey's central bank raised its gold holdings by 23.344 tonnes in August to 487.351 tonnes, preliminary data from the International Monetary Fund ... Economy
Turkey issues first license to import northern Iraq gasTurkey's energy watchdog has issued its first license to import natural gas from northern Iraq to a Turkish company, paving the way for increased ... Energy