ANKARA - Bloomberg
Turkey's current account deficit probably widened for a 12th consecutive month in May, increasing chances the YTL will weaken as a political crisis undermines investor confidence, a survey showed. The shortfall swelled to $4.7 billion from $3.6 billion in the same month a year earlier, according to the median estimate of 18 economists surveyed by Bloomberg. The Ankara-based central bank will release the figures tomorrow.
Rising energy prices are pushing up the import bill, while the global credit crunch cuts the foreign investment Turkey needs to finance its trade deficit. The YTL has declined 12.5 percent against the euro this year on investor concern that the country is relying on borrowing to narrow the deficit, a strategy that carries “considerable risks,” Standard & Poor's said June 24.
Threat to currency:
“The global backdrop remains fluid and with Turkey's balance of payments profile there's a real threat to the YTL,” said Ahmet Akarlı, economist at Goldman Sachs in London. “The political situation only compounds the vulnerability.”
The trade deficit in May, a major component of the current-account gap, widened to a record $6.8 billion, the statistics agency said June 30. Imports of fuels and mineral oils rose to $4.6 billion from $2.7 billion in the same month of 2007.
Borrowing by companies was $27.5 billion in the year through April, up from $19.2 billion in the same period a year earlier.
Yields on Turkish domestic bonds rose last week as the Treasury began a program of debt sales designed to help roll over a record YTL 43.3 billion of domestic debt due in July and August.
The government sold YTL 5.8 billion in five-year floating rate notes ahead of a repayment of a total YTL 6.9 billion. The yield rose 0.09 percentage point to 22.36 percent last week, after reaching 22.80 percent on July 1, its highest since October 2006.
There's no debt sale planned this week and a total redemption of YTL 1.9 billion is due.
Istanbul Stock Exchange's benchmark IMKB-100 stock index fell 4.3 percent to 34,300 last week, the fifth consecutive weekly decline. The index hit a two-year low July 1 and has slumped 20 percent since March 14, when prosecutors filed a lawsuit to shut down the governing Justice and Development Party, or AKP, for undermining secularity.
The court last week heard testimony from the party and from Chief Prosecutor Abdurrahman Yalçınkaya. It is not clear when a verdict will be reached.
The Turkish Statistical Institute, or TÜİK, is due to publish May industrial production figures today and capacity utilization numbers Thursday.