Turkey's lira eased 2 percent in the middle of the day to 1.2420 against the dollar on Friday due to the continued effects of a firmer dollar as investors moved to extend sell-offs in emerging market currencies. (UPDATED)


The currency closed at 1.2180 on Thursday. "It's a general emerging market sell-off. South Africa, Hungary, Brazil, we're all being sold off because there is a continued inclination to buy the dollar," Reuters quoted Emir Baruh of Finansbank as saying.

The currency has lost some 4.6 percent this week due to a strengthening dollar and lower investor sentiment for emerging market currencies. The lira slipped on Thursday after the Central Bank said it would consider interest rate cuts starting this month following lower-than expected August inflation.

The euro declined to an 11-month low against the dollar on speculation a credit-market slump will push European economies into recession.

The currency headed for its biggest weekly decline versus the yen in more than a year after European Central Bank President Jean-Claude Trichet said on Thursday that the economy was weak and Luxembourg Finance Minister Jean-Claude Juncker said the euro was overvalued.

"This is a global recession story," Toru Umemoto, chief currency analyst in Tokyo at Barclays Capital, told Bloomberg on Friday. "We're seeing a reversal of what's been happening over the past two years. Now the dollar and the yen are benefiting as risk appetite is on the decline."

The euro fell to $1.4281 in early afternoon trade in Tokyo, from $1.4325 on Thursday. It earlier touched $1.4214, the weakest since Oct. 24. The euro slid to 150.60 yen, the lowest since Aug. 17, 2007, before trading at 152.24 yen from 153.40 yen. It fell 4.6 percent this week. The yen reached 105.69 per dollar, the highest since July 17, and traded at 106.62 from 107.08.

The benchmark bond April 14 of Turkey, 2010 yield rose to 19.08 percent after touching 19.13 percent on Thursday. The yield on the bond closed on Wednesday at 19.03 percent.

The main Istanbul stock exchange index closed the first trading session 2.58 percent down at 38,537 points, underperforming global emerging markets.