Turkish markets tumble over Iraqi turmoil fears

ISTANBUL

The Istanbul Stock Exchange plummeted by around 3.3 percent following reports of seizure of hostages the previous afternoon.

The Turkish Lira has weakened against the U.S. dollar and stocks opened the day with losses due to heightened concerns over the turmoil in neighboring Iraq.The lira/dollar ratio climbed over 2.12 in the morning as investors fear the geopolitical risks in Iraq may have knock-on effects in Turkey.Forty-nine Turkish citizens, including Consul General Öztürk Yılmaz, were taken hostage by militants of the Islamic State in Iraq and the Levant (ISIL) in the northern Iraqi city of Mosul on June 11.The Istanbul Stock Exchange also had a weak start to June 12, after plummeting by around 3.3 percent following reports of seizure of hostages the previous afternoon. The BIST-100 index opened with losses over 1 percent, before rising slightly.The currency also slightly recovered some of its losses, rising to around 2.1178 as of 10.00 a.m.Some analysts have also suggested that the purge of five mid-level bureaucrats from the Central Bank might have had an impact on the slide of the currency, raising concerns over the Bank’s stability and immunity to political tensions.The Central Bank replaced five executives on June 11, following Prime Minister Recep Tayyip Erdoğan’s increasingly strident criticism of Governor Erdem Başçı’s strategy amid a wave of reshuffles in various state offices.