The uncertainty remains whether the turbulence that began in the markets following the arrest of Istanbul Mayor Ekrem İmamoğlu will continue.
According to Bloomberg, the costs of borrowing Turkish lira in the offshore market and insuring the country’s debt against default are hovering near the levels they set last week, a sign that traders remain nervous after a turbulent period for the market.
The offshore rate was at 187% as of 8:18 AM in Istanbul, close to its highest level since June 2023. Turkey’s five-year credit default swap stood at 327 basis points, little changed from Friday’s level, reaching a one-year high.
These movements indicate that investors are preparing for more volatility in Turkish assets on Monday, according to Bloomberg.
The lira weakened by 0.1%, trading at 38.0086 per dollar at 8:21 AM in Istanbul, according to data compiled by Bloomberg.
İmamoğlu’s detention last week caused panic in the markets, leading to a fall in the Turkish lira and the stock market, and a rise in bond yields.
The country’s leading economic and financial institutions quickly began working to limit this impact.
According to Bloomberg‘s report, citing people familiar with the matter, the Central Bank held a meeting with bank executives on Sunday to discuss potential market fluctuations and steps to be taken. The Banks Association later said that monetary authorities and lenders had held a “technical meeting.”
According to BloombergHT, citing unnamed sources, Treasury and Finance Minister Mehmet Şimşek also held a meeting with regulatory agencies on measures to be taken against market turbulence.
Turkey’s market regulator, the Capital Markets Board (CMB), also announced a wide range of measures on Sunday night to boost the market. These steps included a ban on short selling, looser conditions for share buybacks, and a reduction in the minimum equity protection requirement for margin trading.
