US embassy cable - 03ANKARA1421

UNCLAS ANKARA 001421 
 
SIPDIS 
 
 
SENSITIVE 
 
 
STATE FOR E, P, EUR/SE AND EB 
TREASURY FOR U/S TAYLOR AND OASIA - MILLS 
NSC FOR QUANRUD AND BRYZA 
 
 
E.O. 12958: N/A 
TAGS: ECON, PREL, TU 
SUBJECT: TURKEY'S ECONOMY MARCH 5 COB 
 
REF: ANKARA 1406 
 
 
Sensitive but unclassified, and not for internet 
distribution. 
 
 
Market - Rally Continuing 
------------------------- 
 
 
1.  (U) All Turkish markets continued to strengthen in 
afternoon trading on March 5, with expectations of the 
rallies continuing into March 6. 
 
 
--  The lira appreciated over 2 percent, to close at TL 
1,609,000.  According to several market participants (Yapi 
Kredi Treasurer Imece, JP Morgan/Chase Treasurer Gumisdis), 
Turks switching their lira back into dollars was the main 
cause of the lira movement. 
 
 
--  The benchmark lira-denominated T-bill (March 3, 2004 
maturity) strengthened 4.5 percentage points to 58 percent 
compounded, with trades at tomorrow settlement lower still at 
56.5 percent compounded. 
 
 
--  The Istanbul Stock Exchange 100 index closed up 2 percent 
on the day, in moderate trading volume of TL 486 trillion 
(about $300 million). 
 
 
Comment 
------- 
 
 
2.  (SBU) Both Turkish banks and London-based investment 
banks tell us their investors are relying on a second 
parliamentary resolution, which they see as unlocking a very 
generous U.S. package.  These investors see confirmation of 
this scenario in the AK Chairman Erdogan and TGS Chief of 
Staff Ozkok statements (reftel).  There is an additional 
element motivating Turkish investors, per the bankers who 
serve them:  Turks are already invested, want to be 
optimistic to protect their own investments, and are likely 
to stay in.  Some foreign hedge funds are likely to sell on 
the good news of the U.S. package's approval, should that 
happen. 
PEARSON