Turmoil may value dollar against YTL
Posted by meb at February 13th, 2008
Markets started another hectic week due to the U.S.-based subprime mortgage crisis, and its devastating impact on international bourses since the beginning of the year.
Developing counties with high current account deficits, such as Turkey, are experiencing major cash outflow due to the mortgage-related concerns, reported business daily Referans.
The U.S. dollar lost value against the Turkish lira (YTL) yesterday compared to Monday’s data to stand at YTL 1.2117 as of 4:40 p.m. The dollar ended last week at YTL 1.21, rose by Ykr 3 to YTL 1.24 Monday, as concerns in the loan market expanded to Europe. The dollar price may be up to YTL 1.28 in the upcoming days, anticipated experts. As of yesterday, the YTL had lost 3.70 percent against the dollar and 3.37 percent against the euro compared to the beginning of the year.
The U.S. dollar dipped as low as YTL 1.15, said Halil Reçber, a strategist at Anadolu Yatırım, an Istanbul-based investment securities corporation. “Now the dollar is testing the waters at the YTL 1.25 level. After climbing to YTL 1.25, the dollar may gradually rise first to YTL 1.28 and then eventually to YTL 1.35.” Both domestic and foreign investors are purchasing dollars; however, foreigners have a weighted status, said Reçber. A strong foreign-based hand is purchasing dollars, he added.
IMKB faces difficulties:
During the G-7 Summit last weekend, finance ministers of The Group of Seven industrialized countries said the slump in the U.S. real estate market and credit crunch impose risks on growth. The statement created fear about the expansion of the crisis to Europe, hence, the tension in the stock market.
The instability in global bourses had effects on the Istanbul Stock Exchange (IMKB) causing it to display a tremulous course at the beginning of the week.
Although it climbed 2,197 points to close at 43,539 yesterday, rising 5.31 percent compared to the first day of the week, the IMKB-100 index has been the biggest loser from the subprime mortgage turmoil since the beginning of the year, losing 25.56 percent of its value. During the same period, losses at the Dow Jones Index added up to 8.76 percent in value.
The oscillating course in the markets will continue until the first half of the year, said Fazıl Zobu, research director at Standard Ünlü Securities.
Cash outflow to be ongoing:
Ongoing mortgage crisis-related concerns in money markets have resulted in asset sales in developing countries, said Burçin Metin, dealer at Textilbank’s foreign currency department. Cash outflow may continue for a while, said Metin. “The first resistance level for the dollar stands at YTL 1.25. If this level is surpassed, the dollar may climb first to YTL 1.28 and then to YTL 1.30 level.”
The course of the dollar price depends on the investment preferences of foreign investors, said Sevgi Aytekin, manager at Abank’s foreign currency department.
International investors sold a net $925 million worth of Turkish equities in January, reported Bloomberg yesterday. Foreign investors were net sellers in August and November and had been net buyers in the remainder of 2007. Foreigners last month sold $188.9 million shares of Garanti Bank, Turkey’s third-biggest listed bank. It was followed by İşbank, the largest-listed lender by assets, with $158.9 million and VakıfBank with $94.4 million. Meanwhile, Tüpraş, the country’s biggest oil refiner, was the most-bought stock with a net buy of $16.8 million. That was followed by household goods maker Arçelik with $8.7 million and real estate developer İş REIT with $7.5 million.
U.S. retail sale data for January to be announced today and industrial production data to be announced Friday is expected to shape the global market. The presentation by FED Chairman Ben Bernanke and Treasury Chairman Henry Paulson tomorrow will also affect conditions. The balance sheets of companies such as Coca Cola and General Motors are awaited. Interest decision from the Japanese Central Bank, which will be announced Friday, is also on the agenda of the markets. It is expected that Turkey’s Central Bank will cut interest rates by 25 basis points tomorrow.
Source: Turkish Daily News
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