Turkish stocks, bonds and the lira all slid, meanwhile, after Turkish authorities detained President Tayyip Erdogan’s main political rival on Wednesday. [Getty]
The Turkish lira plunged to an all-time low against the dollar on Wednesday, after police raided the home of Istanbul’s powerful opposition mayor, Ekrem Imamoglu.
The currency was trading at 39 liras per dollar after the mayor, a key opponent of President Recep Tayyip Erdogan, was detained over a corruption probe, a move denounced by his opposition CHP party as a “coup”.
The lira fell 12% to its all-time low of 42 per dollar, and was last down was last down more than 6%, while the benchmark index tumbled close to 6%.
Analysts said the arrest raises concerns about economic reforms in Turkey.
“From a market perspective, traders had become increasingly complacent, and that spell has now been broken, with dramatic results as traders reprice Turkey’s political risk premia, triggering this morning’s sharp lira selloff,” Nick Rees, head of macro research at Monex Europe, told Reuters.
Turkey’s international bonds were also swept up in the selling pressure, with most long-dated maturities down more than 1 cent on the dollar.
The 2047 maturity shed 1.57 cents to be bid at 75.74 cents, Tradeweb data showed.
Analysts said the move out of the lira was likely boosting the U.S. dollar.
