Turkey’s lira weakened the most in three weeks and stocks fell as Greece’s deepening financing crisis triggered a sell-off of emerging-market assets. Bonds declined.
The currency depreciated 0.9 percent to 2.6899 per dollar at 12:51 p.m. in Istanbul, the biggest drop since June 8. The lira has lost 13 percent this year, the worst in emerging markets after Brazil’s real.
Investors are shunning all but the safest assets after Greece shut its banks and imposed capital controls in a dead-of-night announcement to avert the collapse of its financial system as the country edged closer to an exit from the euro. Turkey is Greece’s fourth-biggest trading partner, according to data compiled by Bloomberg.
The Lira drop “is an initial reaction to the Greek crisis, but it’s unlikely to last long,” Alp Serbetli, an Istanbul-based foreign-exchange trader at Anadolubank AS, said by telephone. “Right now there’s no clarity on how Greece’s debts will be handled, so there’s a lot of uncertainty.”
The risk of potential contagion if Greece leaves the euro spurred a slide of as much as 1.9 percent in the European currency on Monday and sparked declines in global stock markets. It comes as Turkish politicians try to form a coalition government after the June 7 elections that failed to hand the ruling AK Party an outright majority. Inability to do so may lead to fresh elections.
The Borsa Istanbul 100 Index fell 1.4 percent to 82,344.06 points, the biggest decline in two weeks, led by Turkiye Garanti Bankasi AS and Akbank TAS, the nation’s largest banks by market capitalization. The yield on two-year government bonds rose one basis point to 9.75 percent.
“The fall in stocks seems to be relatively limited compared to other emerging market countries,” Tunc Yildirim, managing director at Istanbul-based Unlu Securities, said by phone.
MSCI Inc.’s emerging markets index retreated 1.9 percent, the most since Dec. 1.