The value of the Turkish lira fell to a record low yesterday, and the decline was also felt in the Turkish stock market after yesterday’s devastating earthquake added to existing pressures in the form of a strong dollar, geopolitical risks, and surprisingly high inflation.
According to Reuters, the Tukish lira fell 18.85 percent against the US dollar. The country’s main stock benchmark fell as much as 4.6 percent, while banks fell more than five percent before matching some losses with key indexes down between 3.4-5 percent by 1pm
Yields on local 10-year government bonds rose to as much as 10.2 percent, the highest level in nearly two months.
According to Piotr Matis, a senior financial analyst at In Touch Capital Markets, the tragic events that followed after the southern part of Turkey was struck by a powerful earthquake, are a source of further uncertainty ahead of key elections that will likely be held in May.
The Istanbul Stock Exchange Borsa temporarily suspended trading in shares of several companies in the earthquake zone in the early morning hours but added more names to the list as the day progressed.
According to Reuters, emerging markets are under increasing pressure as currencies and stocks worldwide feel the pressure after the dollar rallied sharply on Friday.
Tougher sanctions on Russia
Many international investors have quit in the past few years amid continued market turmoil and acceptance of Ankara’s unorthodox economic and monetary policies, including interest rate cuts in the face of rising inflation.
Geopolitical tensions have recently raised the prospect of the United States taking an even tougher stance on enforcing sanctions against Russia, which would further increase pressure on Turkish markets after Washington warned Ankara about exports of chemicals, microchips, and other products to Russia that could be used in by Moscow’s war efforts in Ukraine.