Azernews.Az

By Bloomberg

The lira weakened to a record, extending its third monthly depreciation, and Turkish bonds fell as the economy minister said the government should discuss changing central bank regulations.

The currency dropped as much as 0.8 percent to 2.2535 per dollar as Nihat Zeybekci said the Central Bank of Turkey’s independence should be conditional on the body taking “national interest” into account. Turkish bonds were on course for their worst month in more than six years amid government pressure on central bank Governor Erdem Basci to step up the pace of interest-rate cuts.

“The lira is now poised to tumble much further amid the political turbulences and questions about the independence of the central bank,” Bernd Berg, the director of emerging-markets strategy at Societe Generale SA in London, said in an e-mailed note. “The escalation of political risks is a major concern.”

Basci has been under persistent attack, including from President Recep Tayyip Erdogan, to lower borrowing costs since the bank more than doubled its main rate in January last year to halt a slide in the lira. The currency may weaken toward 2.65 over the next four weeks, according to Societe Generale, which also closed all of its bullish trades on Turkey on Friday.

The lira declined 0.6 percent to 2.5199 per dollar by 1:24 p.m. in Istanbul. The yield on two-year notes jumped 37 basis points to 8.85 percent, bringing the increase in February to 196 basis points.

“An unnecessary blurred central bank picture will do nothing but aggravate the situation and lead to FX uncertainty,” Simon Quijano-Evans, a strategist at Commerzbank AG in London, said in an e-mailed note.