UPDATE 1-Turkish Lira weakens when Erdogan interrogates the election results

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ISTANBUL, April 8 (Reuters) – The Turkish lira has weakened to 5.7020 against the dollar on Monday after Turkish president Tayyip Erdogan declared that the margin of votes in Istanbul was too small to claim a victory, fueling fears of a re-election.

The lira has weakened by more than 1.5 percent since its closure of 5.6220 on Friday, after Erdogan's comments, when he repeated that his party tried to tell the full votes of Istanbul.

The TRYTOM = D3 currency, which stood at 5.7 am to 0827 GMT, was put under pressure by the first results of the local elections which showed that Erdogan's AK Party (AKP) lost control of Ankara and Istanbul in the main party of opposition.

The AKP has already called for early results in all 39 districts of Istanbul, leading to partial or complete reports throughout Turkey's largest city.

Last year, the lira lost almost 30 percent against the dollar due to concerns about central bank independence and worsening ties with Washington.

On Monday, the Turkish central bank reduced the lira interest rate limit for swap transactions to 24%, from the previous 25.5%. On Friday, the bank set the limit at 25.5 percent.

The Turkish central bank also opened a week's repurchase auctions for the first time since March 22nd, when it announced that it would suspend them for a period of time considering developments in financial markets.

The move indicated that the central bank reversed its course of tightening monetary policy by suspending repo auctions, effectively raising its average financing cost, traders said.

The shares went down and the yield on the 10-year benchmark TR10YT = RR rose on Monday. (Reporting by Sarah Dadouch, Additional Report by Nevzat Devranoglu, Editing by Jonathan Spicer and Ece Toksabay)

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