Turkey's stocks plunge; protests follow mayor's detention

Turkey's stock market is facing serious trouble, experiencing its worst week since 2008. This downturn follows the recent detention of Istanbul's mayor, Ekrem Imamoglu, who is viewed as a major rival to President Tayyip Erdogan. The situation has sparked nationwide protests and heightened concerns about Turkey's political climate. The Turkish lira has dropped by 4% this week, despite the central bank's attempts to stabilize the currency. The BIST-100 index, Turkey's stock benchmark, was down 7.82% by Friday afternoon. These declines triggered market-wide circuit breakers on the Istanbul stock exchange. The overall drop for the index this week could reach 15%, marking the most significant decline since the 2008 financial crisis. Following Imamoglu's arrest, protests erupted across the country, with thousands of people taking to the streets. The opposition has labeled the detention as a coup attempt, highlighting ongoing tensions and what they see as a crackdown on dissenting voices. In response to the crisis, Turkey's central bank has sold about $10 billion in foreign exchange to support the lira. It has also raised key interest rates to 46%, aiming to manage inflation and currency volatility. These moves may lead to higher loan interest rates and less credit availability in the economy. Turkey's Finance Minister, Mehmet Simsek, described the current market fluctuations as temporary and assured that the government is taking necessary steps to manage the situation. He emphasized that the country is committed to its economic plan. Analysts had hoped for further interest rate cuts, but recent events have led to expectations shifting. JPMorgan now anticipates that the central bank will maintain the policy rate at 42.5% during its next meeting in April, postponing any potential cuts until later in the year.