Türkiye battles to stop market rout as protests over mayor continues

Central Bank policymakers have announced a raft of measures to stop a run on Turkish equities, as markets remain on edge amid mass nationwide protests.

Measures include a curb on short-selling and an easing of share buy-backs. 

International markets are still showing signs of nerves as anti-government protests across the country enter their fifth day. 

It comes after the jailing of President Recep Tayyip Erdogan's main political rival, Istanbul mayor Ekrem Imamoglu. 

Charges against him for corruption in public office came as his Republican People's party (CHP) voted to endorse him as the opposition candidate to run against Erdogan in presidential elections in 2028. 

Markets have reacted with alarm to the developments. On Wednesday after Imamoglu's detention, the Turkish lira fell by over 10 percent, plunging to a new low of 42 to the U.S. dollar. 

Long term government borrowing costs rose to their highest point in over a decade. Istanbul's main BIST 100 index saw its biggest one day fall in three years, losing 6.8 percent before trading was temporarily suspended. 

Striving for stability

Central bankers acted fast to prevent the embattled currency losing any more value. An estimated $11.5 billion was spent to support the lira's price, four times higher than any previous daily intervention. 

At an unscheduled meeting on Thursday, policymakers hiked Türkiye's key overnight interest rate by two percentage points to 46 percent, to prevent a dollar switch by investors. 

After a so-called 'technical meeting' with commercial leaders on Sunday, Central Bank officials revealed new steps to maintain stability in financial markets. These include "a ban on short selling transactions in Borsa Istanbul AŞ equity markets." 

This aims to prevent a run on equities that could have the effect of pushing markets lower. 

Measures "facilitating share buybacks by publicly traded companies", to safeguard the value of listed Turkish corporates has also been announced, while rules on equity requirements for firms borrowing to invest have been eased. 

Finance Minister Mehmet Simsek described the current volatility as "temporary." Simsek is credited with masterminding an economic overhaul that has seen Türkiye return to orthodox fiscal policies after years of rate cutting and runaway inflation. 

Faced with another crisis in international investor sentiment, he dismissed rumors that he was standing down from his role. 

"In order for the economic program to achieve its goals, all authorized persons and institutions continue their work uninterruptedly," he wrote on X.