Turkish Markets in Turmoil as Political Tensions Mount

Turkish financial markets struggled on Friday, marked by tumbling stocks and bonds, following the detention of Istanbul mayor and President Erdogan's main political rival, Ekrem Imamoglu. The central bank's intervention included a $10 billion FX sale and rate adjustments, but uncertainty looms over future monetary policy direction.

In a tumultuous week for Turkey's financial markets, stocks and bonds led a downward spiral as political tensions rose, marked by the detention of Istanbul's mayor Ekrem Imamoglu, seen as President Erdogan's primary opponent.

Borsa Istanbul faced significant losses, with the BIST-100 and banking index both plummeting, triggering circuit breakers. The lira's stability remains precarious, despite central bank interventions including significant foreign exchange sales and interest rate increases.

Economic analysts predict higher funding costs for banks and lowered credit volumes. The central bank's moves suggest a pivot from expected rate cuts, as monetary policy continues to navigate uncertain waters.

(With inputs from agencies.)