Turkey is shutting down stock markets as the financial crisis spreads in the markets

Turkey’s largest exchange shut down trade Friday after a crisis in the country’s currency, already tied to a sting, spread to commodities.

Borsa Istanbul announced the so-called temporary passenger after its high Bist 100 index dropped by 5 percent. After trading resumed, the benchmark dropped by 8 percent.

The sale came as the Turkish lira dropped by 7 percent to a constant drop of more than 17 US dollars, and one day later the central bank collapsed again. reduced interest rates although annual interest rates exceeds 20 percent.

The lira has fallen sharply this year following a fall in prices, as President Recep Tayyip Erdogan – who rejects the economic theory that high interest rates drive inflation – is taking a big toll on the central bank.

“The central bank has lost its power,” said Timothy Ash of BlueBay Asset Management.

The stock exchange also said it would suspend repo trading in Turkish bonds as prices increase their recent decline. Yields over 10 years in Turkey rose by 0.3 percent on Friday to 21.5 percent.

The Turkish stock market has so far been shut down by the turmoil that is costing the currency, with investors betting that the lower euro is better for foreign investors. Even if Friday lost, the Bist 100 mark is still up 40 percent this year according to local currencies. In the case of the dollar, it is down 35 percent.

However, a sharp drop in the lira could lead to fears about the financial performance of companies borrowing in foreign currency, or the possibility that Turkish investors may start withdrawing their money from banks, according to Ash.

“The movement of the lira is very dangerous. People are worried that we are getting to the point where the debtors will have problems,” he said.

The central bank continued to infiltrate the markets with the aim of helping the lira to sell foreign currency on Friday, again showing that its monetary policy was disrupting Turkish businesses.

“We are amazed to see the central bank, which cut interest rates yesterday, deliver its precious assets to the market today,” Erdal Bahcivan, head of the Istanbul Chamber of Industry, said in a Twitter post.

On Thursday, Erdogan announced a 50 percent wage increase to protect workers from rising prices, which economists warned would increase oil prices.