Turkish markets fall on political unease, CDS hit 8-month high

ISTANBUL - Reuters

Lira lost ground while its debt insurance costs rose to their highest level since November amid protests. REUTERS photo

Turkey’s lira lost ground on June 5 while the country’s debt insurance costs rose to their highest since November, as worries continued over anti-government demonstrations although there was an official apology over police violence.

Turkish government has faced some of the fiercest anti-government protests in years since last weekend but the apology on June 4 from the deputy prime minister contributed to some hopes of an easing of tensions.

“We expect demonstrations to continue but in a peaceful manner from now on,” Uğur Bayraktar, general manager at Ekspres Invest, said.

“Although this would have positive impact on financial markets, ongoing protests would have reverberations over the business environment.”

Turkey’s five-year credit default swaps (CDS) rose seven basis points to 148 bps, according to Markit.

The lira fell to 1.8820 against the dollar from 1.8804 on June 4. It hit its weakest level since January 2012 on June 3 at 1.9005.

The main Istanbul share index was down 0.54 percent to 80,206.17 points at 1040 GMT, having closed 4.87 percent lower on June 3 after plummeting more than 10 percent on June 2. Banking shares were down 1.2 percent.

The two-year benchmark bond yield rose to 6.17 percent from 6.03 percent late on June 4.