Markets, lira gain amid growth concerns

Turkish assets and currency recouped losses on Monday while concerns about weaker growth and policy uncertainty tempered relief at Fitch’s decision late on Friday to affirm Turkey’s investment-grade rating and stable outlook. The lira was at 25521 to the US dollar on Monday afternoon, hitting nearly a three-week high.

The lira has hit a series of record lows this month on the worries about central bank independence. The Borsa Istanbul (BIST), the broadest m

Turkish assets and currency recouped losses on Monday while concerns about weaker growth and policy uncertainty tempered relief at Fitchand#39s decision late on Friday to affirm Turkeyand#39s investment-grade rating and stable outlook.

The lira was at 25521 to the US dollar on Monday afternoon, hitting nearly a three-week high. The lira has hit a series of record lows this month on the worries about central bank independence.

The Borsa Istanbul (BIST), the broadest measure of Istanbul stock performance, was up 126 percent, outperforming most emerging market peers on Monday. Investors had expected a change in the rating outlook to andquotnegativeandquot.

The credit rating agency warned that policy coherence and credibility were weaker than in similarly rated peers, however, citing recent political demands for sharp interest rate cuts. As June parliamentary elections approach, President Recep Tayyip ErdoIan has called for lower rates, fuelling perceptions that the independent central bank is subject to political meddling.

The central bank kept borrowing costs steady at a policy meeting last week but could face fresh pressure to ease after data on Monday showed consumer confidence at a six-year low. andquotThe economy is struggling to get tractionfire on all cylinders this side of elections in June,andquot Timothy Ash, head of emerging markets research at Standard Bank, said in a note.

andquotThe danger is that this weak data will just encourage politicians to renew their assault on the (central bank).andquot The consumer confidence index fell to 64.

39 points this month, its lowest since March 2009 and far below the 100 mark separating pessimism from optimism

.

SOURCE: Today’s Zaman