The Turkish assets experienced fresh pressure on Monday after opposition mayors faced weekend crackdowns which intensified investor concerns about political influence on economic policy.
The Turkish lira experienced a decline to 40 dollars during initial market hours before stabilizing at 39.99 dollars. The currency depreciation strengthened an existing 11% depreciation for the year. The 2045 Turkish dollar bond price dropped almost one cent to reach 85 cents. The cost of government debt insurance protection increased substantially as 5-year CDS spreads expanded 13 basis points to reach 292 bps.
The sweeping corruption probe resulted in the arrests of mayors from Adana, Adiyaman and Antalya which foreign leaders and opposition figures denounced as politically motivated. The detention operations target the Republican People’s Party (CHP) to weaken its position before upcoming elections according to critics.
The Turkish market experienced a return of investors after President Erdogan adopted orthodox monetary policies during 2023. Political overreach indications threaten to destroy the current investor confidence. The Istanbul-based analyst predicts foreign capital will rapidly leave Turkey if President Erdogan extends his political control over economic choices.
The BIST 100 stock index of Turkey dropped 1.25% and banking stocks decreased by 0.58% because investors worry about political instability affecting the country’s weak economic growth.
