The pound had already switched into a new historic low against the dollar and the euro last week, after the arrest of Mayor Constantinople.
The agonizing attempt of the Turkish authorities to avoid the economic sedimentation that will cause the political crisis in the background of Ekrem Imoglou’s imprisonment, describes the Politico.
As stated in the report, the Turkish authorities attempted Monday to halt the rapid fall of the currency and the stock market after the political crisis that broke out with the imprisonment of Recep Tayyip Erdogan’s political opponent, Ekrem Imamoglou, and the Apostle.
The Turkish pound recorded nearly 2% casualties against the dollar, while the government bond market has been pressured by opening up markets after the weekend, causing turbulence on markets. However, by noon, emergency interventions by the Central Bank of Turkey (TCMB) and the Stock Exchange Regulatory Authority (SPK) showed temporarily to hold the pressure.
The pound had already switched into a new historical low against the dollar and the euro last week, following the arrest of Mayor of Constantinople, who was considered Erdogan’s main opponent in the 2028 presidential election. Imamoglou.
Both demonstrations and market turmoil could be worse, estimates Deutsche Bank strategic analyst Jim Reid.
“The fact that he was not charged with terrorism means that the situation is not as extreme as he could be,” he said, noting that “such a development would lead to the appointment of a Commissioner to the Municipality of Constantinople, increasing the risk of new demonstrations and turmoil.”
It is noted that the Turkish interior minister announced on Monday that about 1,100 protesters have been arrested so far.
Political tension and economic concerns
The latest events rekindle fears – which have never ceased to exist in the ranks of investors – that Turkey is heading for absolute authoritarianism, while Recep Tayyip Erdogan will probably attempt to remain in power for yet another term.
Foreign investors and many Turkish companies have not yet recovered from the shock of Erdogan’s re -election, which was accompanied by an uncontrollable expense ejecting, leading inflation to levels above 80% in 2024. respectively, the wave of repression after the failed 2016 pound had caused a criminal tract.
However, unlike those periods, analysts estimate that the Turkish economy today is on a more steady basis. Inflation is gradually receding, confidence in the banking system is reinforced and the current transaction deficit – traditionally the weak point of the Turkish economy – has been reduced below 4% of GDP in the last three months, according to JPMorgan estimates.
Attempts to smooth
In this context, the authorities’ efforts to maintain stability seem to perform relatively quickly. Already last week, Turkey’s Central Bank (TCMB) had reacted with a series of measures to prevent the pound from falling, increasing an emergency interest rate of 46% from 44%. On Monday, it announced that it would run a 91 -day auction of stations to absorb over -pounds – the first such action for two decades.
For its part, the Stock Exchange Regulatory Authority (SPK) attempted to halt the fall of the shares by imposing short selling ban on Sunday, while facilitating listed companies to buy their own shares. The Bist 100, who had recorded losses of about 15% last week after arrest and charges against Ekrem Imamoglu, reacted almost 1% on Monday.
However, analysts warn that the situation remains fluid and the economy will hardly avoid the consequences. According to BNP Paribas, Turkey’s central bank will probably maintain a stricter monetary policy for the rest of the year, limiting the degree of support it can offer to the economy. A weaker pound, and will continue to push the value of imports higher, letting inflation remain around 30% at the end of this year.
CNN.GR