Loading ...All Heck Breaks Loose amid Fears of Another Currency Crisis after Turkey’s Central Bank Governor Got Sacked Following Shock-and-Awe Rate Hike
After four months of relative calm, the Turkish lira is once again doing what it does best: slumping against every major currency. It nose-dived 17% overnight to near all-time lows, hitting 8.39 against the dollar and 9.97 against the euro before recovering later on, ending the day down over 7% against the dollar, amid concerns that the central bank and state-owned banks cushioned the fall by selling dollars into the market, thereby further depleting Turkey’s already scarce foreign currency reserves. The lira has lost half of its value since its currency crisis began in 2018.
The Borsa Istanbul Index suffered one of its steepest selloffs in years, before triggering circuit breakers that halted trading. The BIST 100 Index ended the day down 9.8%. Yields on Turkey’s lira-denominated 10-year bonds soared from 14% to 19%, as investors rushed for the exits. Investors also dumped shares of European banks with close ties to Turkey. Spain’s BBVA, which owns around half of Turkish lender Garanti, tumbled 7.5%, its biggest fall since November.