All Hell Breaks Loose In Turkey: Stocks Halted, Overnight Lira Implied Rate Hits 10,000%

0
67

Zero Hedge: Chaos has broken out across Turkey’s capital markets with bank shares crashing and marketwide stop-loss halts activated after President Tayyip Erdogan shocked investors by sacking the central bank governor.

Turkey’s stock market logged its worst two days since the global financial crisis of 2008 this week: the fall in Turkey’s main Borsa Istanbul (BIST-100) index on Monday was the largest since mid-2013, when the Fed’s “taper tantrum” hammered emerging markets including Turkey. Turkey started off just as bad, with the BIST 100 Index plunging almost 9%, triggering circuit breakers on the Istanbul bourse for the second day.

Chaos has broken out across Turkey’s capital markets with bank shares crashing and marketwide stop-loss halts activated after President Tayyip Erdogan shocked investors by sacking the central bank governor.

But as Bloomberg notes, after a few hours of panicked selling, stocks had clawed back almost all of the losses and the lira stabilized near a record low. Losses in Turkish markets slowed on Tuesday as some investors scooped up bargains, pulling the main equity gauge back from its biggest two-day drop in 20 years.

Indeed, after a chaotic trading day on Monday in the wake of President Erdogan’s decision to fire central bank Governor Naci Agbal and appoint a hand-picked puppet who believes in Erdoganomics – the country’s 4th central banker in 2 years – markets seemed to calm down following reassuring statements from Turkish officials. Yigit Bulut, a senior adviser to Erdogan, said the central bank would avoid any extraordinary steps under Agbal’s successor, Sahap Kavcioglu. He also reiterated Erdogan’s monetary policy theory that high inflation is caused by elevated interest rates.

Still, it will be extremely difficult to restore foreign investor confidence in the country’s battered financial system now that the central bank is officially Erdogan’s plaything. Read More

Hits: 66