TL strengthens, BIST 100 rises after interest rate cut

Foreign exchange rates and gold prices declined and the stock market rose after the Central Bank of the Republic of Turkey (CBRT) reduced the upper band of the interest rate corridor 50 basis points in line with market expectations.

Following the CBRT's decision, lira-dollar parity declined to TL 2.8087 - its lowest level since April 4 - and the euro fell 0.65 percent to TL 3.1950. Due to the impact of the decline in the dollar exchange rate, gold lost nearly 1 percent of its value per gram, falling to TL 112.75.

The Borsa Istanbul stock exchange's BIST 100 index began increasing as foreign exchange rates declined and long-term bond interests plunged 9.11 percent. The index has risen above 86,700 points, which analysts define as a "resistive level." It has risen to 86,883.39 points, its highest level ever, and is trying to stabilize at around 86,700 points. Analysts say the decision that was made during the first Monetary Policy Committee (MPC) meeting chaired by new CBRT Governor Murat Çetinkaya was in parallel with market expectations. They suggest the decision has had a positive impact on markets, while emerging confidence has led to a fall in long-term bond interests. The compound interest in the 10-year benchmark bond, which closed at 9.30 percent on Tuesday, dropped to 9.11 percent following the CBRT's decision and hovered at around 9.18 percent.