Economic Turmoil in Turkey After Political Rival's Arrest

Turkey's lira plummeted to a historic low after the detention of Istanbul mayor Ekrem Imamoglu, President Erdogan's main political rival. This move, labeled a 'coup attempt' by the opposition, has sparked fears of further economic instability, with significant impacts on the currency, bonds, and stock markets.

Turkey's economy faced a severe setback as the lira experienced a historic decline, reaching an all-time low of 42 to the dollar on Wednesday. This economic turmoil was prompted by the detention of Istanbul's mayor, Ekrem Imamoglu, who was poised to become the main opposition candidate against President Tayyip Erdogan.

The arrest, described as a 'coup attempt' by opposition parties, contributed to widespread financial instability. Stocks and bonds also took a significant hit. The central bank's monetary policies are now under scrutiny, with analysts expressing concerns over potential shifts in interest rates amid fears of inflationary pressures.

Investors were alarmed by the political tensions and the potential for further outflows from Turkey's already fragile economy. Finance Minister Mehmet Simsek assured that measures are being taken to stabilize the market, as local banks work to provide financial support. Meanwhile, the trading environment remained volatile, with significant fluctuations in Turkish financial markets.

(With inputs from agencies.)