ISTANBUL: Turkish stocks were set for their worst week since the aftermath of 2008’s Lehman Brothers collapse on Friday as concerns about this week’s detention of President Tayyip Erdogan’s main political rival refused to subside.
The lira was set for a 4% weekly slump despite aggressive action from Turkey’s central bank in recent days while the latest selloff in stocks triggered two market-wide circuit breakers on Borsa Istanbul
The move against Istanbul mayor Ekrem Imamoglu was called a coup attempt by the opposition and appears to cap a months-long legal crackdown on opposition figures which has been condemned as a politicised attempt to silence dissent.
Turkey’s lira, stocks and bonds have suffered since Wednesday when authorities detained Imamoglu, seen as Erdogan’s main political rival. Protests erupted and thousands marched nationwide.
By 1450 GMT the benchmark BIST-100 index was trading 7.82% lower, and the banking index had fallen 9.37%, after trading resumed at 0857 GMT.
The benchmark BIST-100 index is on track for a 15% weekly plunge - its worst drop since the global financial crisis in October 2008.
Turkey’s sovereign dollar bonds also slid for the third straight day, with the longer-dated issues shedding 2 cents and on track for a weekly loss of more than 3 cents, their largest since January 2024.
The cost of insuring Turkey’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 6.7% 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.
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