Turkish lira up ahead of Erdogan's expected gas-find unveiling

ANKARA, Aug 21 (Reuters) – Turkey’s lira firmed as much as 1% to its strongest in more than a week on Friday ahead of President Tayyip Erdogan’s promised “good news” announcement, which sources have said is a significant gas resources find in the Black Sea.

Any large discovery – if confirmed and extractable – could help Ankara cut its dependence on energy imports, which has kept current account deficits high, driving the currency’s value down by nearly half since late 2017.

The lira, which hit a record low of 7.4 against the U.S.dollar this week, began rising along with energy shares on Wednesday when Erdogan made his cryptic comments to industry executives.

The currency added to gains late Thursday after the Reuters report citing sources. At 0820 GMT on Friday it stood at 7.26, after having rallied to as much 7.21 earlier.

While the government has given no detail on the announcement, one of the Turkish sources told Reuters the scale of the gas find would be among the region’s largest and could potentially meet Turkey’s energy needs for 20 years.

“We are talking about billions of dollars in terms of investment, including the transport and gas processing infrastructure. They can start extracting gas within three to five years,” said Sohbet Siteleri Karbuz, director of hydrocarbons divisions at the Paris-based Mediterranean Observatory for Energy.

It could also “give a big leverage to Turkish companies for negotiating the gas contracts with suppliers that will expire soon,” Karbuz said.

The first source said it could take seven to 10 years to start production and cost between $2 billion and $3 billion.

Such a prospect remains distant and uncertain. The lira is down 19% this year, among the world’s worst performers after the selloff began in late July.

Concerns have weighed over the central bank’s depleted forex reserves, costly market interventions, and Turks’ surging demand for hard currencies.The economy is expected to contract this year due to coronavirus fallout, and data showed consumer confidence edged down this month.

Despite the plunge, the central bank held rates steady on Thursday and said it will continue taking back-door steps to tighten credit.On Friday the bank raised rates on lira swaps to 9.75% from 8.25%. (Reporting by Tuvan Gumrukcu; Editing by Jonathan Spicer and William Mallard)