The treasury managed another successful auction of one-year bonds on 18 April, selling TL 47.9 million million ($1,100 million) worth to bids totalling TL 56.6 million million ($1,300 million). This marks another successful shift by the treasury into the longer term from its previous reliance on short-term three-month bills.

At the same time, the average interest rate was reduced by 3.77 percentage points to 95.65 per cent from the treasury's previous one-year bond auction on 4 April. One-year paper is defined as a bond in Turkey, and anything shorter as a bill. Interest rates on recent issues of treasury paper have fallen to a compounded annual average of around 95-100 per cent from 160- 170 per cent for those at the beginning of the year, say brokers.

Including issues in April, the treasury's issued bond stock has risen to a total TL 407.7 million million ($9,600 million) from TL 290 million million ($6,800 million) at the end of March, when the total issued bill stock was valued at TL 531 million million ($12,600 million).

However, market resistance may be developing amongst the banks at the auctions, say brokers. The previous one-year auction sold TL 69.8 million million worth ($1,700 million) to bids totalling TL 117 million million ($2,800 million). The interest rates fell by around 22 points from the one-year auction prior to that on 23 March.

An auction in the week ending 14 April of 18-month paper was premature, according to banking sources. It only sold TL 1,000 million million ($23.8 million).