Turkish lira, stock market drop to record low after Istanbul mayor and Erdogan rival arrested

The Turkish lira on Wednesday fell to a record low against the dollar with bonds and stocks also tumbling sharply, after authorities detained President Tayyip Erdogan's main political rival.

Turkey's lira fell as much as 12.7% and touched a new all-time low of 42 to the dollar on Wednesday.

The surprise arrest of Istanbul mayor Ekrem Imamoglu — a rival of Turkish President Recep Tayyip Erdogan and leading opposition party figure — on charges he denies crashed the Turkish lira to a record low against the dollar and the country’s benchmark stock index dropped by as much as 7% .

The lira traded at 38.90 to the dollar at 1016 GMT, from a close of 36.67 on Tuesday, having recouped some of the losses from the all-time low it hit earlier - but still having had its biggest decline since July 2023. The earlier tumble to 42 marked one of the lira's largest absolute intraday moves on record.

 

Turkey's international government bonds also came under pressure with longer-dated maturities suffering the sharpest falls. The 2045 maturity fell 1.6 cents to be bid at 85.117 cents, its lowest level since

Imamoglu, who won the mayorship of Turkey’s most populous city in April of 2023, was arrested on charges including terrorism and organized crime, according to state media outlet Anadolu, which cited the Istanbul Chief Public Prosecutor’s Office. The news agency reported that prosecutors also issued warrants for 100 other people.

The popular 53-year-old mayor was seen as the next opposition party candidate for the Turkish presidency. Imamoglu’s Republican People’s Party (CHP), Turkey’s main opposition party, was set to hold a primary election on March 23, during which Imamoglu was widely expected to emerge as the group’s presidential candidate. 

In a statement, the CHP flatly rejected the charges against Imamoglu, calling the move a coup.

“Making decisions on behalf of the people, using force to replace the will of the people or to obstruct it is a coup,” Ozgur Ozel, CHP chairman, wrote in a Google-translated post on the X social media platform.

“There is currently a force in place to prevent the nation from determining the next president. We are faced with a coup attempt against our next president.”