Turkey Stocks Slump With Lira as Minister Urges Erdogan to Quit

Turkey’s stock index slid to the lowest in four months and the lira fell after a third minister implicated in a corruption probe resigned, saying Prime Minister Recep Tayyip Erdogan was responsible and should quit.

The Borsa Istanbul 100 Index fell 4.2 percent to 66,096.57 at the close in Istanbul, the lowest level since Aug. 28. The currency weakened 0.4 percent to 2.0861 per dollar at 5:40 p.m., after gaining as much as 0.7 percent earlier. The 10-year bond yield rose one basis points, or 0.01 percentage point, to 10.05 percent.

Environment and Urban Works Minister Erdogan Bayraktar said in an interview with NTV television that Erdogan should step down as well because all of his actions were done with the prime minister’s approval. Economy Minister Zafer Caglayan quit earlier today after police detained his son on Dec. 17 in probes into bribery, money laundering, corruption in government tenders and gold smuggling, his office said in a statement. Interior Minister Muammer Guler, whose son was jailed too, also resigned, NTV said. Bayraktar’s son was also detained, then released in the investigation.

“The markets turned sour after Erdogan Bayraktar’s statement,” Murat Yardimci, head of trading at ING Bank AS in Istanbul, said in e-mailed comments. “He said the prime minister should resign as well and the market slumped amid lack of liquidity.”

Lira Reverses

The lira had rebounded yesterday from a record low of 2.0992 after the central bank said it will sell at least $3 billion by year-end and a similar amount, at least, next month to support the currency. The bank sold $450 million in an auction today and will sell at least $250 million tomorrow.

The corruption probe is “a conspiracy” and not an investigation into corruption, Erdogan said today while addressing his party’s provincial leaders in Ankara. Turkey is facing an “apparent economic assassination,” he said. Turkey’s “economic success” made it a target for international powers, he said.

Under Erdogan’s tenure as prime minister over the last decade, Turkey’s gross domestic product more than tripled in nominal terms, inflation fell from more than 70 percent to single digits and the benchmark equities index surged more than 700 percent.

The nation achieved investment-grade status at Fitch Ratings and Moody’s Investors Service, helping benchmark bond yields to fall to records in May. The central bank’s foreign-exchange reserves climbed to an all-time high of $115 billion on Dec. 13.

Cabinet Changes

Turkey may announce a cabinet revision that replaces 10 ministers as early as today, Dunya newspaper reported, without saying how it got the information. The country is scheduled to hold local elections in March, followed by presidential elections in August and general elections next year.

President Abdullah Gul said yesterday that the cabinet changes would be announced after he meets with Erdogan, according to state-run TRT television. Erdogan went to the presidential palace to meet with Gul today, NTV said.

A police raid on Interior Minister Guler’s son’s home found several safes and a hoard of cash totaling more than $1.2 million, which the minister said came from his son’s sale of a villa, according to Haberturk newspaper.

“This latest resignation shows the debate will continue,” Evren Kirikoglu, a strategist at Akbank TAS in Istanbul, said in an e-mail. “Foreign investors view this as an indication that the parties subject to the probes are not in agreement among themselves.”

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