Turkish Market Turmoil: Political Tensions Spark Economic Concerns

Turkish stocks and the lira are experiencing significant declines due to the political arrest of Istanbul mayor Ekrem Imamoglu. This event has triggered protests and market instability, drawing parallels to the 2008 financial crisis. The central bank's interventions have not curbed fears of economic deceleration.

The arrest of Istanbul mayor Ekrem Imamoglu, positioned as President Erdogan's primary political adversary, has catalyzed a significant downturn in Turkey's financial markets. The BIST-100 index plummeted by 7.82% as of 1450 GMT, while the banking index noted a 9.37% drop.

The lira, amidst aggressive central bank measures like the $10 billion FX sale, continued its nearly 7% decline against the dollar this year. The currency's woes were exacerbated by political unrest across the country, drawing thousands to protest Imamoglu's detention.

Amid the turmoil, Turkish sovereign bonds saw their value dip for a third consecutive day. The central bank's rate-hike to 46% is speculated to have long-term repercussions, potentially hindering bank profitability and stalling the anticipated interest rate cuts by the monetary meeting in April.

(With inputs from agencies.)