Introduction to Türkiye’s Stock Market
Türkiye’s benchmark BIST 100 index has climbed to 10,926, its highest level in four and a half months. This surge is largely attributed to better-than-expected July inflation data, which has boosted optimism over a continued rate-cut cycle. The index closed the session at 10,853, up 1%, with a trading volume of $4.6 billion, effectively erasing all losses sustained since the market volatility in March.
Inflation Data and Its Impact
Consumer prices rose by 2.06% in July, driven by falling clothing prices and moderate food cost increases despite mid-year price revisions. This brought the annual inflation rate down to 33.52%, its lowest level since November 2021. The decline in inflation rates is a significant indicator for potential monetary policy adjustments, including interest rate cuts.
Annual Inflation Rate Decline
The annual inflation rate has been steadily declining from 75.45% in May 2024 to 33.52% in July 2025. This trend suggests that the economy is moving towards stability, which could lead to more aggressive monetary policy easing in the future.
Sectoral Performance
All major sectoral indices closed higher, with the technology index rising 1.75%, the financials index gaining 1.08%, the services index adding 1.12%, and the industrials index increasing 0.81%. The liquid banking index recorded the strongest gain, rising 1.8%. Out of the 100 stocks listed on the BIST 100 index, 71 advanced, 27 declined, and 2 ended flat. The most actively traded stocks were Turkish Airlines, Akbank, Yapi Kredi Bank, Is Bank (C), and Koc Holding.
Exchange Rates
On the exchange rates, the Central Bank of the Republic of Türkiye (CBRT) set the effective USD rate at 40.5656 for buying and 40.7282 for selling. These rates are crucial for understanding the external value of the Turkish currency and its impact on trade and investment.
Rate Cut Expectations
Following the latest inflation data, expectations for a policy rate cut by the central bank have gained momentum. Market analysts suggest that if the consumer inflation data for August also remains subdued, the Monetary Policy Committee may consider reducing the benchmark interest rate by up to 300 basis points in its September meeting. This potential rate cut could ease margin pressure on banks and act as a catalyst for recovery, with sector profitability expected to gradually rebound from the third quarter of 2025.
Central Bank Actions
The Turkish central bank resumed interest rate cuts at its July meeting with a 300-basis-point reduction, lowering the policy rate to 43%. This move signals the central bank’s proactive approach to managing inflation and supporting economic growth.
Conclusion
The rebound of Istanbul stocks to March levels, driven by positive inflation data and hopes for further rate cuts, indicates a positive trend in Türkiye’s economy. As inflation continues to decline and the central bank considers additional monetary easing, the outlook for the Turkish stock market and economy appears promising. However, the path ahead will depend on various factors, including global economic conditions, domestic policy decisions, and the ability of the central bank to balance inflation control with economic growth.
