Markets React Sharply to Imamoğlu’s Detention and Political Developments in Turkey

As domestic political tensions escalate, markets have experienced significant volatility. The Istanbul Chief Public Prosecutor’s Office has launched a large-scale operation targeting 106 individuals, including Istanbul Metropolitan Municipality (IBB) Mayor Ekrem İmamoğlu. Experts note that markets dislike uncertainty and stress that the day's political developments will be crucial in determining market direction, urging investors to avoid panic selling.

Global Markets Remain Unsettled

Meanwhile, global markets are also on edge. This week, 15 central banks are set to announce interest rate decisions, with the U.S. Federal Reserve's (Fed) rate decision, expected at 9:00 PM Turkish time (TSI), being the key event. Statements from the Fed and its Chairman Jerome Powell will be highly significant for global markets.

Banking Sector Plunges Over 9%

Following the announcement of the detention orders, the Borsa Istanbul 100 (BIST) index opened with a sharp 6.87% decline, losing 741 points to start the day at 10,060 points. Borsa Istanbul implemented a circuit breaker at the market open, temporarily halting continuous trading, which resumed at 10:30 AM. However, as losses deepened, trading was halted again at 2:08 PM, resuming at 2:38 PM. By the end of the trading session, the BIST 100 index had closed below the psychological 10,000-point level for the first time in 11 sessions, finishing down 8.72% at 9,860 points. The banking index suffered even greater losses, dropping 9.88% to 14,888 points.

Dollar Surpasses 41 TL, Euro Exceeds 44 TL

The U.S. dollar has been in an upward trend for approximately four months, and following the detentions, it hit a new record high. As the day progressed, the rally accelerated, and for the first time in history, the dollar surpassed 41 TL, reaching an intraday high of 41.6410 TL. By the close of Turkish markets, the dollar was trading at 37.9162 TL, up 3.34%. Similarly, the euro hit a fresh all-time high of 44.8800 TL and was trading at 41.4502 TL, up 3.13% in the same period. Experts attribute the sharp rise to low trading volumes. According to market analysts, Turkey’s Central Bank intervened after the dollar exceeded the 40 TL level. Sources suggest that the Central Bank’s foreign exchange sales could reach $10 billion today. Bilkent University professor and former chief economist of the Central Bank, Prof. Dr. Ali Hakan Kara, commented on the situation via social media, sharing a dollar/TL chart with the caption: "Intervention has arrived."

Gold Prices Surge Past 4,000 TL

Gold prices have been bolstered by rising tensions in the Middle East and increasing global trade uncertainty. Spot gold reached a record high of $3,045 per ounce. Meanwhile, gram gold, which is priced based on both global gold prices and the USD/TRY exchange rate, hit an all-time high of 4,068 TL. As of 6:15 PM, spot gold was trading at $3,030 per ounce, up 0.14%, while gram gold was changing hands at 3,694 TL, reflecting a 3.21% increase.

Turkey's Risk Premium Hits Five-Month High

Following the detention orders, Turkey’s Credit Default Swap (CDS), a key measure of the country’s risk premium, surged. The five-year CDS reached 279 basis points, its highest level since October 2024.

Government Bond Market Under Pressure

Turkey’s government bond market also faced selling pressure. The yield on the two-year bond rose to 38.31%, while the five-year and ten-year yields climbed to 32.26% and 28.88%, respectively.

Sharp Declines in Futures Markets

The Borsa Istanbul Futures and Options Market (VİOP) also witnessed steep losses. The April futures contract for the BIST 30 index opened 3.9% lower at 11,930 points. Losses deepened throughout the session, with the BIST 30 index in VİOP dropping more than 5%.