Following the İmamoğlu operation, where the investigations that were initiated one after another, resulting in his detention, the economic wreckage in just 3 days is becoming hard to ignore. Mehmet Şimşek, who shared a X post on the first day of the detention, said, 'All precautions are being taken to preserve the gains of the Economic Stabilization Program', but financial experts are emphasizing that the witch hunt will have negative consequences.
Istanbul Mayor Ekrem İmamoğlu, whose diploma cancellation decision was announced before his party’s presidential preliminaries, was detained in a dawn operation on March 19 within the scope of 2 investigations initiated against him. The detention order, which was implemented in the morning hours, caused sharp movements in the stock market, foreign exchange and CDS premia with the opening of the markets.
MEHMET ŞİMŞEK SAID 'WHAT IS NECESSARY IS BEING DONE' BUT...
Treasury and Finance Minister Mehmet Şimşek shared a post on his social media account at 11.40 on March 19 regarding the sharp movements in the markets. Minister Şimşek said, "Everything necessary is being done for the healthy functioning of the markets. The economic program we are implementing continues with determination." The sharp increase in the dollar/TL exchange rate, which exceeded 10 percent in the initial stages of the panic, calmed the day, with the dollar falling below 38 liras on Wednesday. The dollar, which pushed the level of 39 liras on Thursday and Friday, slumped once again thanks interventions of the Central Bank and state lenders in the markets, closed the week at 37.73 liras.
[embed]https://www.youtube.com/watch?v=8qnXs2jOFCo&t=52s[/embed]
The British Financial Times newspaper, in its analysis regarding the detention of Ekrem İmamoğlu, assessed that the events would have negative repercussions on the Turkish economy.
“The decline of the Turkish Lira against the dollar on Wednesday is a sign that investors fear that the President’s commitment to structural reforms cannot be trusted. Many people are concerned that the President is more interested in his own political future than the economy,” the analysis said.
SUMMARY OF THE COLLAPSE IN THE 3 DAYS AFTER THE IMAMOĞLU OPERATION
While the Central Bank’s first move to limit the increase in the exchange rate was the sale of $8 billion through public banks, another $11 billion in reserves were wasted on the second day with the same method.
The Central Bank launched TL-settled forward foreign exchange auctions. After a $885 million sale yesterday, a total of $1 billion 122 million worth of forward transactions have been made in the last three days.
Former TCMB Chief Economist Prof. Dr. Hakan Kara shared an estimated figure for the sales of the Central Bank in three days from the X account. According to Prof. Dr. Kara; approximately 23 billion dollars were sold in the last three days. Economist Güzem Yılmaz Ertem wrote that the loss in the reserves was 25 billion dollars.
ANOTHER INTERVENTION FROM CB IN INTEREST RATES
The TCMB Monetary Policy Committee met off-calendar on Thursday. It increased the overnight borrowing interest rate by 200 basis points to 46 percent. The statement made by the Bank included the statement, “Measures supporting tight monetary stance were put in progress by evaluating the risks that developments in financial markets may pose in terms of inflation outlook.”
The CB announced on Friday liquidity bond issuance to soak up excess TL liquidity, estimated at TL1000 million.
[embed]https://www.paturkey.com/news/2025/hsbc-political-risk-currency-challenge-19290/[/embed]
STOCK EXCHANGE CIRCUIT BREAKERS ACTIVATED TWICE
On March 19, the BIST 100 index opened under the shadow of news of detentions. The index, which closed at 10,802 on Tuesday, finished the day with a loss of 8.79 percent at 9,853.01 points. The decline in the stock market remained limited on Thursday, March 20. The BIST 100 Index closed the day with a loss of 0.47 value at 9,814.41 points.
The serious decline in the stock market continued on the last day of the week, March 21. The BIST 100 Index, which slumped below 9,000 points during the day, finished the week at 9,044.64 points with a decrease of 7.81 percent. Rumors that some prominent business people would be detained also contributed to the sharp sales in the stock market.
The weekly decline in the banking index exceeded 26 percent, making it one of the biggest losses in recent years. According to the X post by economist Güzem Yılmaz Ertem: The three-day loss in the stock market accumulated to 2 trillion lira.
[embed]https://www.paturkey.com/news/2025/turkey-central-bank-estimated-to-have-burned-through-10-25-bn-in-fx-reserves-to-defend-currency-19287/[/embed]
TURKEY’S RISK PREMIUM AT A ONE-YEAR HIGH
As a result of the developments, Turkey’s risk premium has increased. Turkey’s five-year CDS rate was at 255 on March 18. On Friday, it rose to 328 points. This picture means that Turkey’s risk premium has reached its highest level since the local elections in March 2024.
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