Turkish lira falls vs dollar, stocks hold nearly steady

The benchmark Istanbul Stock Exchange was nearly steady, falling only 12.87 points to 31,561 after falling nearly 9 percent on the previous day.

The ISE did not show a strong positive reaction, however the markets saw some relief from a worldwide central bank offensive on the credit crunch including a U.S. plan to buy up commercial paper.

The lira rose to 1.3560 against dollar in after-hours trading, however recorded a 1.02 percent loss in the day. The lira dropped below 1.37 level at its lowest during the day.

The yield on the government's April 14, 2010 benchmark bond kept its level on critical 20 percent.   Â

'The most recent news coming from Iceland shows that the volatility will not stop,' Demir Life Insurance's portfolio manager Cengiz Kilic told Reuters.

In Iceland, the government has dismissed the board of directors of Landsbanki and has put the Icelandic bank in receivership.

The Royal Bank of Scotland fell more than 30 percent while Lloyds also lost 18 percent after traders cited speculation of funding with the government.

WALL STREET UP
The Dow Jones Industrial Average rose 0.76 percent in the first trades a day after slumping below 10,000 for the first time in four years.

The Nasdaq added 0.43 percent and the Standard & Poors 500 index advanced 0.67 percent.

After a battering of markets on Monday, global central banks announced plans to pump up liquidity to banks and the Federal Reserve opened up its coffers to companies hit by the credit crunch with a new program that will buy up commercial paper, short-term debt critical for many corporate operations.

TURKEY TAKES MEASURES-PM
Turkish Prime Minister Tayyip Erdogan said on Tuesday the government was in close dialogue with the financial markets and was taking measures to curtail the damage from the crisis on Turkey's economy.

Economy Minister Mehmet Simsek also said the government would stick to fiscal discipline and lower debt/gross domestic product ratios in a move aimed at soothing investors.

Traders said they did not expect the lira to repeat Monday's sharp losses on hopes that the United States' Federal Reserve and the European Central Bank would follow suit after a surprisingly large interest rate cut by Australia.

TREASURY AUCTIONS

The Treasury held auctions Tuesday for a 13-month discount bond, maturing on Oct 18, 2009 and 20-month discount bond maturing on June 23, 2010.

 

The Treasury sold 223 million YTL ($162 million) nominal-valued 13-month discount bonds while the net sale was 181 million YTL ($131.7 million) in the auction. The composite interest rate became 20.47 percent, and the simple interest rate became 20.70 percent.

 

In the auction for 20-month bonds, the Treasury sold 1.1 billion YTL ($800 million) nominal-valued bonds while the net sale was 805 million YTL ($585.6 million). The composite interest rate became 20.60 percent, and the simple interest rate became 22.08 percent.