Turkey’s lira has tumbled to a record low, with the currency falling 12.7% earlier in the day and then recouping most of its losses by closing at 37.665 per dollar, a 2.6% decline. The move comes after Istanbul mayor Ekrem Imamoglu was arrested on charges, which opposition leaders have described as a “coup attempt”. Analysts are worried about the impact on monetary policy, with some predicting that the lira’s sharp decline could delay or halt rate-cutting cycles by the central bank.
The benchmark stock index (.XU100) has also fallen near 9%, its largest daily drop in four years. Turkish government bonds have come under pressure, with longer-dated maturities suffering significant falls. Finance Minister Mehmet Simsek said the government is taking steps to ensure market stability without giving further details.
Analysts warn that the lira’s decline could have a knock-on effect on monetary policy, particularly if it delays rate-cutting cycles. The central bank has been easing monetary policies since December, following an 18-month tightening cycle. A sudden shock to the currency may force the central bank to keep interest rates steady for now.
The arrest of Imamoglu has sparked widespread concern among investors, who fear that foreign investors may be deterred by Turkey’s increasing political uncertainty. The opposition has condemned the arrest as a politicized attempt to silence dissent, and analysts expect further selling on the stock market in the coming days.
Source: https://www.reuters.com/markets/currencies/turkish-lira-plunges-record-low-after-erdogan-rival-detained-2025-03-19