News / Europe

Turkey Probes Financial Markets

A currency exchange office in downtown Istanbul, June 21, 2013.
A currency exchange office in downtown Istanbul, June 21, 2013.
TEXT SIZE - +
Dorian Jones
— Turkey's financial markets are being investigated by the country's regulatory board.  The investigation, as well a global sell-off in developing economies and anti-government protests, is threatening the faith in the country's capital markets.

The Ankara-based Capital Markets Board launched the probe after a massive exit from Turkey by foreign investors starting in late May, which caused stocks to plummet, raised borrowing costs significantly and sent the currency to record lows against the dollar.

The investigation is looking at whether the markets were illegally manipulated.  The move comes as Turkish Prime Minister Recep Tayyip Erdogan continues to blame an international financial conspiracy for fomenting the ongoing anti-government protests.

Atilla Yesilada is an analyst with political consulting firm Global Source Partners.  He says the investigation is a worrying sign.

"These are very well documented transactions.  They could simply ask the central bank to provide all the bank data they need.  Why are they going after the banks?  And to top that, why are they asking banks what they did with the money they purchased in those auctions?  I really don't know.  There seems to be no rational explanation except.  A: They are trying to intimidate the banking community; or, B: The manipulation investigation has reached a point where they are really looking for the final piece of evidence to take it to the prosecution stage.  At a time when financial sentiments are really fragile, these are not the appropriate measures to restore faith in the Turkish markets," said Yesilada.

Inan Demir is chief economist for the Istanbul based Finansbank.  He also warns it's not the time to frighten foreign investors.

"Turkish growth performance has been very closely linked to the availability of foreign capital because of a chronic lack of savings at home.  Now it's not that I don't expect Turkey to roll over its debt that is going to mature in the next 12 months.  But with global liquidity less abundant, it could be more costly for Turkey, in the sense that it could have to pay higher interest rates to roll over those debts.  Then growth is likely to suffer," said Demir.

In the next 12 months Turkey has to pay back or roll over about $200 billion in debts.  At the same time, international capital flows are needed to sustain one of the world's largest current account deficits, which rose again this month.

Analyst Yesilada points out that with no person or company as of yet charged with wrongdoing, international investors appear to be keeping their nerves.

"So far nobody has been hurt and most of the global fund managers are veterans of domestic turbulence, and many discount as what is happening now in Turkey as just political rhetoric.  I am afraid slightly more than that, and if I am correct, the shock waves would be of the nature of a major earthquake," he said.

This week,  Erdogan appointed Yigit Bulut as his chief adviser. Bulut is one of the most vocal advocates of the idea that a financial conspiracy is responsible for the unrest, so it appears there is little chance of the government halting the investigation.  Observers warn in such a climate, the current investigation of financial manipulation could extend to more serious charges of conspiring against the government, which could likely further unnerve international financial markets.

You May Like

'Exceptionally Lucky' US Boy Survives Flight in Wheel Well

The boy was unconscious for most of the flight, and appeared to be unharmed after enduring the extremely cold temperatures and lack of oxygen More

US Anti-Corruption Law Snags Major Tech Company

The Foreign Corrupt Practices Act was signed into law by President Jimmy Carter in December, 1977 More

Cameron Criticized for Calling UK 'Christian Country'

Letter from scientists, academics and writers says the prime minister is fostering division by repeatedly referring to England as a 'Christian country' More

Featured Videos

Your JavaScript is turned off or you have an old version of Adobe's Flash Player. Get the latest Flash player.
Ukraine, Russia, United in Faith, Divided in Politicsi
X
Michael Eckels
April 19, 2014
There is a strong historical religious connection between Russia and Ukraine. But what role is religion playing in the current conflict? In the run-up to Easter, Michael Eckels in Moscow reports for VOA.
Video

Video Ukraine, Russia, United in Faith, Divided in Politics

There is a strong historical religious connection between Russia and Ukraine. But what role is religion playing in the current conflict? In the run-up to Easter, Michael Eckels in Moscow reports for VOA.
Video

Video Face of American Farmer is Changing

The average American farmer is now 58 years old, and farmers 65 and older are the fastest growing segment of the population. It’s a troubling trend signaling big changes ahead for American agriculture as aging farmers retire. Reporter Mike Osborne says a new report from the U.S. Census Bureau is suggesting what some of those changes might look like... and why they might not be so troubling.
Video

Video Donetsk Governor: Ukraine Military Assault 'Delicate But Necessary'

Around a dozen state buildings in eastern Ukraine remain in the hands of pro-Russian protesters who are demanding a referendum on self-rule. The governor of the whole Donetsk region is among those forced out by the protesters. He spoke to VOA's Henry Ridgwell from his temporary new office in Donetsk city.
Video

Video Drones May Soon Send Data From High Seas

Drones are usually associated with unmanned flying vehicles, but autonomous watercraft are also becoming useful tools for jobs ranging from scientific exploration to law enforcement to searching for a missing airliner in the Indian Ocean. VOA’s George Putic reports on sea-faring drones.
Video

Video New Earth-Size Planet Found

Not too big, not too small. Not too hot, not too cold. A newly discovered planet looks just right for life as we know it, according to an international group of astronomers. VOA’s Steve Baragona has more.
Video

Video Copts in Diaspora Worry About Future in Egypt

Around 10 percent of Egypt’s population belong to the Coptic faith, making them the largest Christian minority in the Middle East. But they have become targets of violence since the revolution three years ago. With elections scheduled for May and the struggle between the Egyptian military and Islamists continuing, many Copts abroad are deeply worried about the future of their ancient church. VOA religion correspondent Jerome Socolovsky visited a Coptic church outside Washington DC.
Video

Video Critics Say Venezuelan Protests Test Limits of Military's Support

During the two months of deadly anti-government protests that have rocked the oil-rich nation of Venezuela, President Nicolas Maduro has accused the opposition of trying to initiate a coup. Though a small number of military officers have been arrested for allegedly plotting against the government, VOA’s Brian Padden reports the leadership of the armed forces continues to support the president, at least for now.
Video

Video More Millenials Unplug to Embrace Board Games

A big new trend in the U.S. toy industry has more consumers switching off their high-tech gadgets to play with classic toys, like board games. This is especially true among the so-called millenial generation - those born in the 1980's and 90's. Elizabeth Lee has more from an unusual café in Los Angeles, where the new trend is popular and business is booming.
Video

Video Google Buys Drone Company

In its latest purchase of high-tech companies, Google has acquired a manufacturer of solar-powered drones that can stay in the air almost indefinitely, relaying broadband Internet connection to remote areas. It is seen as yet another step in the U.S. based Web giant’s bid to bring Internet to the whole world. VOA’s George Putic reports.
AppleAndroid