Capital markets have seen the darkest day of the recent period. Uncertainties among investors about tight monetary policy following the appointment of new central bank governor brought sharp sales in TRY assets. Borsa Istanbul’s BIST 100 Index closed the day with a loss of 9.79% at 1,379 and TRY depreciated by 10% yesterday. The country’s credit default swaps (CDS) rose by 165 base points to 471 points and the 10-year bond yield increased by 523 base points and saw 19.33%. Weekly interests of TRY exceeded 100% in London swap market. TRY swap transactions of Turkish banks were limited in the London market.
There is more… Yesterday’s developments may lead other problems in the long run and pricing won’t be normalized in the short-term, according to analysts. Moreover, some analysts think that problems can affect Europe as well. In return for foreign investors’ sharp sales in TRY assets, residents sold USD. However, USD sales of residents couldn’t meet the foreign investors’ sales. Domestic investors sold USD 5bn and shifted to the stock exchange while foreign investors made sales and shifted to TRY deposits, for which tax advantage will end by the end of March, according to analysts.
On the manufacturing side, manufacturers which have already fallen on hard times due to raw material shortage, were hit by FX rates. Manufacturers have become unable to supply the market as they couldn’t regulate the prices due to over volatility in the last few days.
USD/TRY saw 8.47 and was balanced at below 8.00 yesterday. Today USD/TRY started the day with 7.76.
EUR/TRY was fluctuated with sharp moves between 9.15-10.08 yesterday. Closed the at 9.25 yesterday, EUR/TRY is traded at 9.37.
Sales are expected to continue at the BIST 100 Index, which closed the day with a loss of 9.79%.
Contrary to FX rates, gold and oil prices decline. Spot gold is traded at USD 1,739 per ounce with the impact of USD’s strengthening. Brent crude fell below USD 64 due to the recovery in demand stemmed from the extension of the pandemic measures in Europe.
On the political side, markets keep an eye on possible cabinet reshuffle…
The only data to be released today will be Turkish Statistical Institute’s (TurkStat) motor vehicle statistics.
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