Turkish financial markets are hit by nerves

Published November 30th, 2000 - 02:00 GMT

Turkish financial markets are having a fit of nerves but the central bank declined to comment on Wednesday, November 29, on press reports that it had injected $1.205 billion (1.39 billion euros) the day before to maintain liquidity in the banking system. 

 

The economic newspaper Dunya affirmed that the bank had been obliged to act "yet again" Tuesday because there had been a shortage of liquidity, saying that in the space of a week, the bank had provided $4.7 billion. 

 

Concern about a shortage of liquidity caused the main index on the stock market in Istanbul to fall by 9.01 percent on Tuesday, to less than 10,000 points for the first time this year. The index closed at 9,641 points. 

 

The governor of the central bank, Gazi Ercel, has urged people to remain calm, saying that there was no need for new measures. 

 

"There is no need for measures," he said late on Tuesday, the news agency Anatolia reported. 

 

The governor was speaking after having held an emergency meeting with the treasury, the bank supervisory body and 19 banks in Istanbul. 

 

The governor said that nervousness, which had been evident in the markets for 10 days, was a "passing" phenomenon. 

 

"The most important thing is to ensure that the system functions normally," he said. 

 

Junior Treasury Minister Selcuk Demiralp said that the "passing situation" would not affect the government's ambitious program. 

 

"We are continuing to apply the program to the letter. The structural reforms must be continued," he told journalists outside a meeting of the World Bank here. 

 

For several months, the government has been trying to reform the banking system in line with demands by the International Monetary Fund (IMF) which, in 1999, granted Turkey a loan of $4.0 billion for three years to support the economic program intended to strangle high inflation. 

 

About a dozen private banks went bankrupt last year and several others have been placed under administration.— (AFP)  

 

© Agence France Presse 2000  

 

 

 

© 2000 Mena Report (www.menareport.com)

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