Currency strategist  Piotr Matys:  Market implications of Imamoglu detention

Turkish stocks plunged, bond yields surged and USDTRY rallied to a fresh all-time high after President Erdogan’s biggest political rival – Istanbul mayor Imamoglu – was reportedly detained by authorities.   In terms of potential implications, the CBRT may have to seriously consider pausing its easing cycle if the lira continues to depreciate at a rapid pace and the process of disinflation slows down markedly. Governor Karahan may find himself in a similar very tough spot as his predecessors who faced tremendous political pressure to lower interest rates.   [embed]https://www.youtube.com/watch?v=8qnXs2jOFCo&t=51s[/embed] Arresting Imamoglu may also cause damage to foreign investors attitude towards Turkish assets, which has been relatively positive since the Erdogan administration made a U-turn towards orthodox policies overseen by the well respected by foreign investors Treasury & FinMin Simsek.   Turkish retail investors who bought stocks as a hedge against rampant inflation could be fairly upset, to put it mildly, with the Erdogan administration for causing a major selloff by detaining Istanbul mayor Imamoglu. Public discontent may increase if the selling pressure on Turkish assets prevails.   Looking more broadly, the latest crackdown on political opponents in Turkey could complicate diplomatic relations between Ankara and Brussels, and EU member state national capitals. Many European leaders – including Polish PM Tusk – expect Turkey to play an important role in strengthening Europe security, as part of the re-armament process.   We covered extensively the latest developments in Turkish politics for our clients at In Touch Capital Markets. Please reach out to us if you're interested in a free and non-obligatory trial.   The author’s Linked-In post   [embed]https://www.youtube.com/watch?v=uJYhess_NQo[/embed] IMPORTANT DİSCLOSURE:  PA Turkey intends to inform Turkey watchers with diverse views and opinions.  Articles in our website may not necessarily represent the view of our editorial board or count as endorsement.     Follow our  English language YouTube videos  @ REAL TURKEY:   https://www.youtube.com/channel/UCKpFJB4GFiNkhmpVZQ_d9Rg And content at Twitter: @AtillaEng Facebook:  Real Turkey Channel:   https://www.facebook.com/realturkeychannel/