The markets in Turkey have been rattled once again this week in a second shockwave from the Fed. While the dollar exchange rate soared to an all-time high of 1.95, the main stock index sank to the lowest level this year and interest rates have surpassed nine percent.
The markets have kicked off the week with a tremor sent out by the U.S. Federal Reserve (Fed) which recently announced that its bond-buying program may soon be reduced. Meanwhile, as concerns surrounding China's economic and financial stability have expedited the breakdown of the market, the first day of transactions prevailed with increasing losses. Led by bank stocks, Turkey's main index BIST 100 lost 3.37 percent in value, closing the day at 700,640 points, marking the lowest closing of the year.
INTEREST SOARS
Accompanying the stock market, interest rates were also unable to withstand the Fed's shockwave. Parallel to the upward motion of U.S. interest bonds, the ten-year interest bonds surpassed nine percent. Spot closings on ten-year bonds reached 8.73 percent and up to 9.17 percent on value date. Transaction volume on benchmark bonds remained limited and closed the day at the 7.81 level.
DOLLAR REACHES A PEAK
With the disintegration seen in international markets, the dollar/TL parity surpassed 1.95 to reach a historical high. The dollar reached historical heights following the messages released by the Fed and broke an all-time record high on the first day of transactions that followed, reaching 1.9580.
The dollar continued on its elevating path into the new week, starting off on Monday at 1.9410 liras. Although the rate regressed with transactions throughout the day, the dollar still closed at 1.9560. The shock experienced in the markets also affected the drop in gold. To the ounce, gold lost 0.77 percent in value, remaining at the 1.286 dollar level.
YOU BROKE IT, NOW FIX IT!
With the Fed sending a shockwave through markets last week by announcing plans to gradually reduce its bond-buying program, reactions towards Fed Chairman Ben Bernanke are also on the rise. Economists are expecting Bernanke to take a step towards easing the pressure. Meanwhile, U.S ten-year interest bonds have reached the highest level seen since 2011.
A 150 MILLION DOLLAR INTERVENTION
The Central Bank's announcement that within the parameters established by the Monetary Policy Committee only one foreign currency tender will be held daily was not enough to ignite the fire of foreign currency. A 442 million dollar bid was received for the 150 million tender. The highest, lowest and average prices in the tender were as follows: 1.9435, 1.9417 and 1.9423 TL.