The Istanbul stock exchange’s main index was hit hard yesterday, closing 7.8 per cent down – worst weekly slump since 2023 – on the third day of protests over the arrest of Istanbul mayor Ekrem Imamoglu.
The 53-year-old mayor – Erdogan’s main political rival – was arrested on Wednesday, days before he was due to be named the CHP party’s candidate for the 2028 presidential race.
The BIST 100 had already slipped by 8.7pc on Wednesday following Imamoglu’s arrest over allegations of “corruption” and links to a “terrorist organisation”.
The damage was limited to a fall of 0.5pc on Thursday, but faced with a sharp fall yesterday, trading was suspended twice in the morning. The index fell below 9,000 points during yesterday trading for the first time since early November, a fall of more than 16.5pc over five days.
Imamoglu’s party has denounced his arrest as a “coup” and international organisations including the European Union have expressed concern.
The lira was set for a 4pc weekly slump despite aggressive action from Türkiye’s central bank in recent days while the latest selloff in stocks triggered two market-wide circuit breakers on Borsa Istanbul
Türkiye’s sovereign dollar bonds also slid for the third straight day, with the longer-dated issues shedding two cents and on track for a weekly losses of more than three cents, their largest since January 2024.
The cost of insuring Türkiye’s debt against default also widened by 18 basis points to 322 bps, data from S&P Global Market Intelligence showed, the widest levels since March 2024.
While the Turkish lira traded at 38.0050 against the US dollar, flat from the previous close and above Wednesday’s record low of 42, the currency is down 6.7pc so far this year.
The central bank sold some $10 billion in FX after Wednesday’s record low, according to economists’ calculations, and took liquidity measures to limit volatility and ease FX demand.
The central bank also suspended its one-week repo auction and hiked its overnight lending rate to 46pc, which economists said amounted to a 350-400 basis-point tightening in policy.
The moves are expected to increase funding costs, which could weigh banks’ balance sheets, pushing loan interest rates higher while lowering credit volumes. The central bank promised to tighten policy “in case a significant and persistent deterioration in inflation is foreseen”. Overnight interest rates on Thursday climbed 134 basis points to 43.64pc, according to data.
&uuid=(email))