Turkish lira firms boosted by restored Russia relations

ANKARA

Despite opening positive on the daily session, Turkish stocks lost 0.72 percent after the fluctuating price of oil and slow corporate earnings on Wednesday.

Borsa Istanbul's BIST-100, the country’s benchmark index, was up 0.19 percent (150.06 points), reaching 78,674 at the opening of the daily session on Wednesday in line with the optimistic atmosphere generated by the restoration of Turkish-Russian relations – following a crisis last November, after closing at 0.96 percent on Tuesday.

But shares in Borsa Istanbul national 100-share index ended the day down with 0.72 percent at 77,955.65 points.

Shares in Borsa Istanbul's most actively traded stock, Garanti Bank, lost 2.91 percent to 7.67 lira, while heavily-traded Emlak Konut shares rose 1.38 percent to 2.93 lira.

Shares in Turkey's flag carrier Turkish airlines traded just 2.09 percent lower at 5.61 lira after increasing 6.2 percent on in the previous day.

The total trading volume was 3.9 billion Turkish liras ($1.31 billion).

President Recep Tayyip Erdogan on Wednesday urged Turkish lenders to reduce interest rates in order to boost growth and promised not to compromise the country’s fiscal discipline. He referred to the recall of bank loans without sufficient reason as “treason”.

Looking forward to a time when interest rates come down and credit is expanded, he said: “No bank will be damaged by lower profit.”

Turkish banking stocks lost 1.78 percent after the president's speech, following 1.6 percent up on Tuesday after Turkey's Central Bank cut its requirement for the reserves banks must hold, as part of an effort to increase the amount of cash available to the economy.

On Wednesday, state-run Ziraat Bank cut home loan rates following the Central Bank’s decision to trim the overnight lending rate to 8.75 percent, bringing Ziraat’s owner-occupier rate to below 1 percent per month.

The Borsa Istanbul Gold Exchange index lost 1.68 percent in value on Wednesday, with gold trading at 127,739 Turkish liras per kilogram.

The Turkish lira rose to 2.9452 against the dollar, the highest since July 15, while the benchmark 10-year government bond yield fell to 9.40 percent from 9.41 percent.

Russian President Vladimir Putin and Erdogan said Turkish-Russian economic and political ties would be strengthened and more resilient. They also revived economic plans and sought policies for the Syrian conflict on Tuesday.

Analysts said that the optimistic atmosphere generated by the restoration of Turkish-Russian relations – following a crisis last November – and its effects on the real economy will gain ground in the weeks to come and also help the Turkish lira's recovery against the dollar.