Türkiye's market decline deepens as protests escalate
Published: 05:03 PM,Mar 21,2025 | EDITED : 09:03 PM,Mar 21,2025
Türkiye's lira, stocks and bonds have suffered since Wednesday
ISTANBUL: Turkish stocks and bonds tumbled for a third straight day on Friday, triggering two market-wide circuit breakers on Borsa Istanbul, as the lira, equities and bonds extended losses following the detention of President Tayyip Erdogan's main political rival on Wednesday.
Türkiye's lira, stocks and bonds have suffered since Wednesday when authorities detained Imamoglu, seen as Erdogan's main political rival. Protests erupted and thousands marched nationwide.
By 13:17 GMT, the benchmark BIST-100 index was trading 7.88 per cent lower and the banking index had fallen 9.57 per cent, after trading resumed at 08:57 GMT. The benchmark BIST-100 index is on track for a 15 per cent weekly plunge — its worst drop since the global financial crisis in October 2008.
Türkiye's market decline deepens as protests escalate's sovereign dollar bonds also slid for the third straight day, with the longer-dated issues shedding 2 cents and on track for a weekly losses of more than 3 cents, their largest since January 2024.
The cost of insuring Türkiye's market decline deepens as protests escalate's debt against default also widened by 18 basis points to 322 bps, data from S&P Global Market Intelligence showed, the widest levels since March 2024.
While the Turkish lira traded at 38.0050 against the US dollar, flat from the previous close and above Wednesday's record low of 42, the currency is down 6.7 per cent so far this year.
The central bank sold some $10 billion in FX after Wednesday's record low, according to economists' calculations and took liquidity measures to limit volatility and ease FX demand.
The central bank also suspended its one-week repo auction and hiked its overnight lending rate to 46 per cent, which economists said amounted to a 350-400 basis-point tightening in policy.
The moves are expected to increase funding costs, which could weigh banks' balance sheets, pushing loan interest rates higher while lowering credit volumes.
The central bank promised to tighten policy 'in case a significant and persistent deterioration in inflation is foreseen'. Overnight interest rates on Thursday climbed 134 basis points to 43.64 per cent, according to data.
The developments have dashed hopes of a central bank policy rate cut at the next meeting, scheduled for April 17.
With inflation falling, the central bank had cut its policy rate by 750 basis points since December, to 42.5 per cent, after an 18-month tightening cycle reversed years of unorthodox policy. Before Wednesday, investors had expected the easing cycle to continue through the year.
'This has put an end to expectations of a rate cut in April and triggered a sell-off in banking stocks,' said Serhat Baskurt, Head of Algorithmic Trading at ALB Yatırım, adding that the central bank's moves this week indicated higher-than-expected foreign exchange demand.
JPMorgan, after Thursday's overnight rate hike, said it expected the bank to keep its policy rate unchanged at 42.5 per cent in April and only resume its cutting cycle from June 19. — Reuters
Türkiye's lira, stocks and bonds have suffered since Wednesday when authorities detained Imamoglu, seen as Erdogan's main political rival. Protests erupted and thousands marched nationwide.
By 13:17 GMT, the benchmark BIST-100 index was trading 7.88 per cent lower and the banking index had fallen 9.57 per cent, after trading resumed at 08:57 GMT. The benchmark BIST-100 index is on track for a 15 per cent weekly plunge — its worst drop since the global financial crisis in October 2008.
Türkiye's market decline deepens as protests escalate's sovereign dollar bonds also slid for the third straight day, with the longer-dated issues shedding 2 cents and on track for a weekly losses of more than 3 cents, their largest since January 2024.
The cost of insuring Türkiye's market decline deepens as protests escalate's debt against default also widened by 18 basis points to 322 bps, data from S&P Global Market Intelligence showed, the widest levels since March 2024.
While the Turkish lira traded at 38.0050 against the US dollar, flat from the previous close and above Wednesday's record low of 42, the currency is down 6.7 per cent so far this year.
The central bank sold some $10 billion in FX after Wednesday's record low, according to economists' calculations and took liquidity measures to limit volatility and ease FX demand.
The central bank also suspended its one-week repo auction and hiked its overnight lending rate to 46 per cent, which economists said amounted to a 350-400 basis-point tightening in policy.
The moves are expected to increase funding costs, which could weigh banks' balance sheets, pushing loan interest rates higher while lowering credit volumes.
The central bank promised to tighten policy 'in case a significant and persistent deterioration in inflation is foreseen'. Overnight interest rates on Thursday climbed 134 basis points to 43.64 per cent, according to data.
The developments have dashed hopes of a central bank policy rate cut at the next meeting, scheduled for April 17.
With inflation falling, the central bank had cut its policy rate by 750 basis points since December, to 42.5 per cent, after an 18-month tightening cycle reversed years of unorthodox policy. Before Wednesday, investors had expected the easing cycle to continue through the year.
'This has put an end to expectations of a rate cut in April and triggered a sell-off in banking stocks,' said Serhat Baskurt, Head of Algorithmic Trading at ALB Yatırım, adding that the central bank's moves this week indicated higher-than-expected foreign exchange demand.
JPMorgan, after Thursday's overnight rate hike, said it expected the bank to keep its policy rate unchanged at 42.5 per cent in April and only resume its cutting cycle from June 19. — Reuters