Turkish markets are seen extending gains on Friday amid a brighter mood in global bourses following this week's sharp declines. "There is a positive mood overseas and at home too there are positive expectations about inflation data (due after market close at 1330 GMT)," said one banker.
The lira traded at 1.2750 to the dollar in early interbank trade, up from Thursday's closing level of 1.2760. Bankers said the lira could firm further if the inflation data and US payroll figures come in line with expectations. The Turkish currency gained almost 2 percent on Thursday in volatile trade amid reviving risk appetite among investors after briefly weakening as far as 1.3300 earlier this week.
The lira has climbed sharply in recent months on the back of one of the highest yields in liquid emerging markets. But that has left it vulnerable to changes in global risk appetite and many analysts say the currency is overvalued.
Lira bonds also strengthened on Thursday, with the yield on the May 6, 2009 benchmark bond falling to 17.46 percent from Wednesday's close of 17.74 percent. "Today yields could come down to around 17.30 percent," the banker said.
The main stock market index, which hit historic highs last week, climbed 0.18 percent on Thursday to end at 51,393.57 points, one day after clocking up losses of as much as 4.5 percent. It had closed 3.58 percent weaker on Wednesday.
Turkish inflation data for July due to be released later on Friday is expected to show monthly consumer prices falling 0.22 percent and producer prices easing by 0.07 percent, thanks largely to clothing stores' summer sales. But the central bank is widely expected to wait for uncertainty over unprocessed food and oil prices to fade before cutting interest rates.
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