Reuters: US Dollar Report: Turkish lira firms; bank shares lower after sales

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Turkish lira firms; bank shares lower after sales May 25th 2012, 09:35 Fri May 25, 2012 5:35am EDT * Lira edges up on c.bank tightening, bonds flat * Banking shares fall, weigh on main index * Citigroup says selling 10 pct equity interest in Akbank * Denizbank shares tumble as sale price to Sberbank expected below market cap By Seltem Iyigun ISTANBUL, May 25 (Reuters) - The Turkish lira firmed slightly as the central bank continued to provide costlier liquidity on Friday while falls in banking shares held back the main stock index as a flurry of bank stake sales weighed on sentiment. Turkish bonds were trading flat, mainly tracking the lira's performance. By 0845 GMT, the lira traded at 1.8435, stronger than 1.8455 late on Thursday. The currency hit its weakest since mid-January of 1.8563 on Wednesday due to a global sell-off of riskier assets. Against a euro-dollar basket the lira traded at 2.0818, firmer than 2.0833 on Thursday. "Central bank liquidity tightening has started to support the lira clearly as all the short-term funds, which were about $5 billion, have left Turkey. This means we now got through the worse and the lira tends to strengthen even if there are only tiny inflows into the market," said Tufan Comert, strategist at Garanti Securities. "Besides, recent comments of the central bank stimulated expectations that the central bank may announce forex selling auctions. This is also supporting the lira," Comert said. Turkish Central Bank Governor Erdem Basci said on Wednesday the bank may increase the upper limit of lira reserves that banks may hold in forex at its next policy meeting on May 29. The limit currently stands at 40 percent. The central bank has continued to provide expensive funds to the market on Friday by injecting 6 billion lira through an intraday repo auction at a rate of 10.83 percent, far above its usual repo rate of 5.75 percent. The central bank has been applying an unorthodox mix of policies, including daily liquidity management, high reserve requirement ratios and overnight interest rates to try to rein in inflation and a large current account deficit. BANKING SHARES LOWER ON STAKE SALE NEWS The main stock index edged down 0.04 percent to 54,894 points, in line with the MSCI emerging markets index . Shares in Akbank were down 4.48 percent at 5.54 lira after Citigroup said it had sold a 10.1 percent in Akbank at 5.24 lira per share. Shares of Denizbank, the Turkish unit of Franco-Belgian bank Dexia were 15.21 percent lower at 15.05 lira after Denizbank said Dexia and Russian lender Sberbank agreed on exclusive talks on Denizbank's sale. "Denizbank shares were trading at 2.9 times the bank's book value but according to the media reports, Denizbank was sold 1.5 times it's book value. So the sale was lower than the market cap. That's why shares are falling," said Ozgur Yurtdasseven, research manager at Garanti Securities. Sources said previously that the Belgian government, a Dexia shareholder and responsible for most of its guarantees, had wanted 1.5 times DenizBank's book value, which according to Reuters calculations is around $3.6 billion. Shares of Halkbank were 1.85 percent up at 11.00 lira after a media report said the government planned to increase the lender's float rate to 48-49 percent from the current 24.93 percent. Following banking sale news, Turkish banks were down 0.7 percent on Friday. The yield on the benchmark bond maturing on March 5, 2014, stood at 9.52 percent, unchanged from a previous close. Link this Share this Digg this Email Reprints

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