Turkish lira falls 1.5 percent due to London based bond sell-off

The lira, which opened morning trading at 1.61 levels, increased above 1.64 levels during afternoon trade.

"We saw sales orders for Turkish bonds sourced from London, which are thought to be customer orders. These sales raised the currency market," Reuters reported citing a foreign currency expert.

Corporate activity also caused the currency's upward movement to some extent, the source was quoted as saying.

The yield on Turkey's benchmark June 23, 2010 bond rose to 15.37 percent from Friday's 15.14 percent, while the benchmark Istanbul stock exchange declined 2.5 percent.

The Turkish Central Bank reduced the benchmark borrowing rates to 13 percent in a surprise move at its latest monetary policy meeting in a bid to avert the recession risk due to declining demand stemming from the global financial crisis.

The central bank has reduced its key rate 3.75 percentage points in three months, joining policy makers globally in slashing the cost of borrowing as the international credit crisis makes it harder and more costly to borrow.