Monday, May 30, 2005

Turkish Lira Falls; French 'No' Vote May Delay EU Accession

Turkey's lira fell on concern the country's application to join the European Union may be jeopardized by France's rejection of the EU constitution in a referendum yesterday.

The currency fell 0.6 percent to 1.378 per dollar by 8.21 a.m. in Istanbul. The lira has dropped 7 percent in the past three months on concern a French `no' vote and opposition from other EU members including Germany may delay the start of Turkey's EU membership talks, due in October.

Fifty-five percent of French voters rejected the EU constitution in yesterday's balloting. Germany's Christian Democrats, the country's main opposition party that's favored to win national elections this year, has called for the expansion of the EU to be suspended in the event of a `no' vote in France.

"The political circumstances aren't that good for Turkey,'' said Kerem Koz, who helps manage $1 billion of Turkish assets at Denizbank AS in Istanbul, before the referendum result.

Turkey's government has said progress toward EU accession will help attract more foreign investment to the $300 million economy and cut borrowing costs.

(Source: Bloomberg)

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