The Turkish lira has experienced a historic plunge, recording its steepest weekly decline in nearly two years, following the arrest of Ekrem Imamoglu, the Mayor of Istanbul and leading opposition figure – a key opponent to President Recep Tayyip Erdogan. The lira lost 3.7% over five days, marking its worst performance since June 2023, with the currency trading at 38 liras to the dollar on Friday morning in Istanbul.
Political uncertainty has triggered massive lira sales, with lenders offloading up to $9 billion. In response, Turkey's central bank unexpectedly raised interest rates to support the currency.
This interest rate hike aims to curb capital outflows and stabilize the lira, according to economists at Goldman Sachs. However, the move also underscores the heavy political uncertainty weighing on Turkey's economy.
Comments