First modification:
The death toll is expected to rise in Turkey and Syria after more than 3,800 people were killed and thousands injured as rescue teams searched through the night, hoping to pull more survivors from the rubble after the collapse of thousands of buildings.
The Turkish lira fell to a record low and its main stock market fell 1.35% due to major earthquakes added to pressures from the strong dollar and the war in Ukraine.
The lira fell to 18.85 against the dollar in early trading, before recouping its losses and ending the day unchanged. The main equity benchmark, XU100, fell as much as 5%, and banks, XBANK, 5.5%, before recovering most of their losses.
Yields on 10-year local government bonds hit their highest level in almost two months at 10.2%, while Turkey’s credit default swaps, an insurance against sovereign default, rose 19 basis points from Friday’s close, up to 545 basis points.
Piotr Matys, senior currency analyst at In Touch Capital Markets, said the quake added to uncertainty ahead of crucial elections likely to take place in May.
The Istanbul Stock Exchange temporarily suspended trading in shares of several companies in the area affected by the quake. Emerging markets are under pressure across the board, and currencies and stocks across the developing world are taking a hit from the dollar’s strong rise, following a strong US jobs report suggesting that the Fed Federal could maintain its aggressive stance for longer.
Turkey comes under additional pressure
The Turks, plagued for years by chronic inflation and a falling currency, will go to the polls in May for presidential and parliamentary elections, perhaps the most important in the republic’s century of history.
Many international investors left the country in recent years due to recurring market turmoil and Ankara’s adoption of unorthodox economic and monetary policies, such as cutting interest rates in the face of rising inflation.
Geopolitical tensions have returned and Washington has warned Ankara to be more active in preventing the export to Russia of chemicals, microchips and other products that could be used in the war against Ukraine.
Tatha Ghose, a currency analyst at Commerzbank, noted that recent inflation data also raised concerns, such as Friday’s reading of 58% annual inflation in January, well above forecasts despite a favorable base effect.
“Last week’s Turkish CPI data came as a bit of a surprise and reignited volatility in the USD-TRY pair, which had been sorely absent in recent months,” Ghose said.
“A new window of volatility in currencies could be just around the corner,” he concluded.
with Reuters