In the first week after Eid al-Fitr, the increasing number of attacks following the massive suicide blast in Suruç and geopolitical risks stemming from airstrikes in northern Iraq and on Islamic State of Iraq and al-Sham (ISIS) camps has caused markets to fall. The Borsa Istanbul Stock Exchange plunged to its lowest level in the last one-and-a-half months with the growing expectations for higher U.S. interest rates and early elections risks. While the interest rate rose to double digits again, the dollar hit a five-week high. Mounting economic and political tensions provided the largest damage to the stock exchange. The BIST-100 Index closed last week with the lowest rates in one-and-a-half months, decreasing 4.9 percent to 78.712 points. Borsa Istanbul came fourth in the world last week in terms of the amount of value lost on a weekly basis. The Russian stock exchange topped the list with a decrease of 11.9 percent due to the fall in oil prices.
The market value of the companies traded on the Borsa Istanbul decreased TL 30 billion ($10.958 billion) to TL 575 billion within a week because of the sharp fall in the stock exchange. While no share gained value on the BIST-30 index, where the exchange's highest performing shares are traded, only seven shares were at a premium on the BIST-100. Only 63 of 438 shares traded at the exchange could increase in general.
The increasing perception of risks showed itself in foreign currency markets despite the two steps taken by the Central Bank of the Republic of Turkey (CBRT). While the dollar increased 3.7 percent, rising to 2.75 against the Turkish lira, which is the highest rate in the last five weeks, the euro rose to above 3 against the Turkish lira, gaining 4 percent in value.
Experts say markets will ease when a government is established and geopolitical risks are tracked. Moreover, selling pressures will decrease if the tension remains as is and mounting conflicts will affect markets in a negative way.
The largest cost of the increase in foreign currency was on the real sector economy, a currency deficit of $175.7 billion by the end of April. The loss of one-week currency differences in real sector companies was $17.2 billion. The liability of the real sector in Turkey is $278.5 billion. Additionally, the short-term currency deficit of the real sector is above $5.7 billion. Uneasiness in the markets also affected interest rates. The interest rate of two-year benchmark bonds reached double digits at 10.05 after nearly one-and-a-half months later.
