ISTANBUL: Turkey’s central bank on Monday sold more than $5 billion in hard currency in a bid to stabilize financial markets that are at risk of a regional war that could derail a rate-cutting cycle and a downward trend in inflation.
Istanbul’s main BIST-100 stock index fell 3.8%, while the main banking index fell 6.5%.
The United States and Israel launched attacks on Iran over the weekend that killed Supreme Leader Ali Khamenei, and Iran responded by attacking targets across the region. As a result, energy prices rose by 7%, sounding alarm bells in import-heavy Türkiye.
JPMorgan predicted that Turkey’s central bank will no longer cut interest rates at its March 12 policy meeting, opting instead to pause the easing cycle that began at the end of 2024. When it expected inflation to be 25% instead of 24%, it revised its policy rate forecast to 31% from 30% at year-end.
On Monday, the Turkish lira fell to 43.97 liras against the dollar, hitting a new all-time low, but maintaining the steady devaluation path observed for almost a year. Global stocks fell on Monday, with investors flocking to the relative safety of the dollar and gold, as the conflict in the region appeared to be coming to an end last week. (Reporting by Can Sezer, Arda Dipova, Jonathan Spicer, Nevzat Devranoglu; Editing by Jonathan Spicer)
