U.S. News

Turkish Stock Market Plunges 8%


The Turkish stock market plunged 8% in early trading on Monday, reacting sharply to political tensions as the Islamic-rooted government comes under strong pressure from secular circles to declare early general elections.

Prime Minister Recep Tayyip Erdogan's government on Friday faced the boycott of opposition parties in presidential elections and a stern warning from the powerful military, which accused the government of tolerating or encouraging radical Islamic circles.

At least 700,000 protesters marched in Istanbul on Sunday, demanding the resignation of the government and the country's influential association of Turkish industrialists and businessmen, TUSIAD, urged the government to declare immediate early general elections.

The market reaction on Monday was expected, and analysts say the markets will speedily recover if political tensions ease or the government decides to go to early polls.

The lira also slid against foreign currencies and was being traded at 1.38 against the U.S. dollar on Monday compared to Friday's 1.33. The interests on bonds rose to 19.31% from Friday's 18.47%.

Turkey has been steadily recovering from a deep financial crisis in 2001 and has carried out solid financial reforms, especially strengthening the ailing banking sector.

The country has huge foreign debt but it has been able to lure foreign investors by maintaining a strict economic reform program, backed by the International Monetary Fund, and other political reforms needed to join the European Union.