Turkish shares slumped by 11.54 percent on Monday, February 19, on fears of political instability after a crisis erupted between Turkish Prime Minister Bulent Ecevit and President Ahmet Necdet Sezer. The Istanbul stock market's national index dropped 1,173 points to 8,996 points in the morning session. The index had closed at 10,709 on Friday.
The plunge came after Ecevit announced that he had left a meeting of the National Security Council after the president had criticized his clampdown on corruption, which sent overnight interest rates soaring to an average of 300 percent.
The Istanbul stock exchange has just started to recover from a grave cash shortage in November last year which rocked financial markets and threatened to derail Ankara's three-year, $4 billion stand-by program with the International Monetary Fund. The IMF agreed in December to release about $10 billion in emergency aid, in return for which Turkey pledged to speed up privatization and reforms in its ailing banking sector.
The euro rose steadily against major currencies in lacklustre Tokyo trading Tuesday, February 20, after the currency got a boost from a political crisis in Turkey, dealers said. In Istanbul on Monday, dealers told AFP the central bank had spent some $4.9 billion from its foreign currency reserves to help support the Turkish currency in response to politically-induced financial turmoil.
The European single currency fetched $0.9228 around 2:00 pm (0500 GMT), up from $0.9108 in London and $0.9134-37 in Tokyo late Monday. It also climbed against the yen to 107.21 yen compared to 106.76 in London and 105.91 here Monday afternoon. "The euro is steadily rising against the dollar after it was lifted by buying linked with the Turkish political turmoil," said Fuji Bank dealer Hideyuki Tsukamoto.
However, DBS Group Holdings in Singapore warned worse than expected industrial data from France and Germany to be released this week should put downward pressure on the euro again. "The data releases from Euroland this week are not expected to be favorable," the Singapore-based bank said in a report.
However, it said weakness in the US economy should cushion the single European currency. "Despite the intense pressure we mention above, the recent dismal announcement by US corporates would provide some support for the euro," it said. The euro's strength against the greenback also helped boost the European unit against the yen, the dealer noted. —(AFP)
© Agence France Presse 2000
© 2001 Mena Report (www.menareport.com)
