Turkey Stocks Sink Most in World Amid Jitters Over Israel Rates
Turkey’s stocks tumbled the most in the world on Monday as investors worried about the impact of higher interest rates in Israel on the country’s economy. The benchmark Borsa Istanbul 100 Index dropped 4.2%, the most since October 2018, and the lira weakened 0.6%.
Turkey’s Economic Struggles
Turkey’s economy has been struggling for some time, with inflation running at a five-year high and the central bank struggling to contain it. The country’s currency has been under pressure since the start of the year, and the central bank has been forced to raise interest rates to try to stem the decline.
The central bank has also been trying to support the lira by buying up foreign currency reserves, but the currency has continued to weaken. The central bank has also been trying to support the economy by cutting interest rates, but the move has been met with criticism from some economists who argue that it could lead to further inflation.
Israel’s Interest Rate Increase
The latest jitters in the Turkish markets were sparked by news that Israel’s central bank had raised interest rates. The move was seen as a sign that the country was trying to contain inflation, which has been rising in recent months.
The higher interest rates in Israel could have a negative impact on Turkey’s economy, as it could lead to a further weakening of the lira and higher borrowing costs for Turkish companies. The higher interest rates could also lead to a further outflow of capital from Turkey, as investors seek higher returns elsewhere.
Impact on Turkish Stocks
The news of the higher interest rates in Israel had a negative impact on Turkish stocks, as investors worried about the impact on the country’s economy. The benchmark Borsa Istanbul 100 Index dropped 4.2%, the most since October 2018, and the lira weakened 0.6%.
The sell-off in Turkish stocks was broad-based, with all sectors falling. Banks were among the worst hit, with the banking index dropping 5.2%. The sell-off was also seen in the bond market, with the yield on 10-year government bonds rising to a two-month high.
Outlook for Turkey
The outlook for Turkey remains uncertain, as the country continues to grapple with high inflation and a weak currency. The central bank has been trying to support the economy by cutting interest rates, but the move has been met with criticism from some economists who argue that it could lead to further inflation.
The higher interest rates in Israel could have a negative impact on Turkey’s economy, as it could lead to a further weakening of the lira and higher borrowing costs for Turkish companies. The higher interest rates could also lead to a further outflow of capital from Turkey, as investors seek higher returns elsewhere.
The Turkish government has been trying to implement reforms to boost the economy, but the impact of these measures remains to be seen. In the meantime, investors will be watching closely to see how the higher interest rates in Israel will affect the Turkish economy.