Global Economic Fluctuations Hit Turkey most
(Zaman) - Recent fluctuations on international markets, which have continued since May after the US Federal Reserve raised interest rates, reportedly affected the Turkish economy most, it has been revealed.
If May 8 is considered the basis and marks the beginning of market movements, since this date, Turkey has seen the greatest fall on its stock exchange and the biggest increase in its public and foreign debts, reports Trend.
An assessment of stock exchange movements in developing countries reveals that all were more or less affected by the economic movements; however, the Istanbul Stock Exchange (ISE) ranked the first with a loss of 24.8 percent.
South Africa exceeded Turkey in terms of increases in foreign exchange rates, with the South African Rand devaluating by 18.8 percent against the US dollar; while the new Turkish lira (YTL) devaluated by 17.3 percent during the past 2.5 months.
The US Federal Reserve (FED) decision to increase interest rates from 1 percent to 5.25 percent over two years to fight inflation was seen as the major cause of fast capital movement out of developing economies, including Turkey.
Investors sold off bonds and stocks held in developing markets and purchased securities instead such as US or German Treasuries, which are considered more secure.
Certain developments in Turkey also increased the negative affect on the attitude of international investors and the markets; the April inflation rate, recorded three times higher than expectations due to high oil prices, the increasing current deficit, the political tension following the State Council attack and debates over early general and presidential elections.
In the same period, Indias stock exchanged suffered a loss of 17.9 percent, Hungary 17.3 percent, Brazil 15.2 percent and South Korea 15.1 percent. Mexicos stock exchange lost around 14 percent in value on average, while the Argentinean stock exchange lost around 13.9 percent.
Turkey also suffered the greatest loss in terms of risk premiums in Eurobonds as a result of the global economic fluctuations. While Turkeys risk premium showed an increase of 1.13 points, the risk premiums of Argentina and Mexico, which are considered to be developed countries, declined. Increases remained at a level of 0.3 points in Brazil, Russia, South Korea and South Africa.
Turkey also saw the highest increase in interest rates of public debts l. While an increase of 6.4 points was observed during this period, interest rates fell in Poland, Russia and Mexico. The interest rate increase remained at 1.4 percent in South Africa, which records the highest interest rates following Turkey.
South Africa saw the highest exchange rate increase with the South African Rand devaluating by 18.8 percent against the US dollar while the new Turkish lira (YTL) devalued by 17.3 percent during the same period. The euro gained 14.9 percent in value against the YTL. The Russian ruble gained value against the US dollar, while the US FED benchmark interest rates increased by 0.1 percent, the price of oil increased by 11.2 percent.