ANKARA (AA) – Turkish shares closed lower Tuesday, with losses in the banking and food sectors driving shares down.
Borsa Istanbul’s BIST-100, the country’s benchmark index, closed down 0.79 percent (619.66 points) at 77,333.61.
On the second trading day of the week, the banking sector index lost about 0.64 percent and the food sector index was also down 2.38 percent.
But the mining sector ended 0.48 percent higher for the day, with a total trading volume of 3.1 billion Turkish liras ($1.05 billion).
Borsa Istanbul’s most actively traded stocks were Garanti Bank, Turkish Airlines, state lender Halkbank, private lender Akbank, and Tekfen Holding.
One of the biggest winners was Tekfen Holding, which saw an increase of 16.57 percent or 1.10 points to trade at 7.74, after its Tekfen Construction division signed a preliminary agreement with Qatar for a $2.1 billion highway project.
The 36-month project aims to build a 10-lane, 34-kilometer highway along with viaducts, road junctions, overpasses, and underpasses, according to the company.
– Gold prices recover
The Borsa Istanbul Gold Exchange index rose 0.37 percent in value Tuesday compared with Monday’s closing, with gold trading at 126,800 Turkish liras per kilogram.
The Turkish lira lost against the dollar at 2.9412 compared with Friday’s close of 2.9460, as the greenback was firm against global currencies in overseas markets amid rising prospects for a rate hike by the U.S. Federal Reserve.
– Turkish Central Bank cuts rates
On Tuesday, Turkey’s Central Bank cut its overnight lending rate by 25 points following recent reductions in the last five months.
The overnight lending rate, the rate at which banks borrow from the Central Bank overnight, went from 8.75 percent to 8.50 percent.
However, Turkey’s overnight borrowing rate, under which banks lend or deposit money to the Central Bank, remained unchanged at 7.25 percent.
“The Central Bank reduced the lending rate 25 basis points in order to increase domestic demand,” Gizmen Nalbantli, a research analyst at foreign exchange company IsikFX in Turkey, told Anadolu Agency.
“Boosting domestic demand is one of the most significant items on the Central Bank’s to-do list. In addition to government measures to increase domestic demand, the Central Bank may continue to reduce the lending rate,” he said.
According to Nalbantli, lowering interest rates is a necessary measure for faster annual loan growth.
“The bank is taking steps to support growth and revive the economy in general. However, I do not believe that domestic demand and growth being dependent on imports is suitable for a sustainable growth rate. Building infrastructure for a growth model dependent on manufacturing is a better alternative,” he added.
