Turkish Lira gains on more speculation of a rate hike

The Turkish lira advanced after a jump in inflation spurred speculation the central bank will raise rates this week.

Government bonds fell after consumer prices rose 12.15 percent in May from a year earlier, matching the median estimate in a survey of economists conducted by Bloomberg. 

Turkey is prepared to raise interest rates again if inflation accelerates, according to two money managers who met with central bank Governor Murat Cetinkaya and Deputy Prime Minister Mehmet Simsek in London last week.

The lira has weakened about 18 percent against the dollar this year, and the depreciation threatens to feed into higher import prices. The central bank is due to meet on Thursday just weeks after policy makers were forced into an unscheduled 300-basis point increase to stem a market rout.

The lira advanced 1 percent to 4.6024 per dollar soon after the data, while the yield on the 10-year government bonds rose four basis points to 14.85 percent.