The arrest of Istanbul Mayor Ekrem İmamoğlu has triggered widespread protests and sharp market losses in Turkey, as concerns grow over political stability and economic fallout.
İmamoğlu, a leading opposition figure and expected challenger to President Recep Tayyip Erdoğan in the next presidential election, was detained on Wednesday along with more than 100 others, including municipal officials, journalists, and businesspeople. Prosecutors have charged him with corruption and links to a terrorist organisation, allegations that İmamoğlu and his supporters reject as politically motivated.
Following the arrest, the Turkish lira fell by as much as 12% at one point, hitting a record low of 42 to the US dollar, before recovering slightly. Borsa Istanbul, the country’s stock exchange, was forced to suspend trading twice after a rapid 6.87% decline. Bank stocks have also faced steep losses, extending their decline to more than 15% for the week.
Turkey’s central bank and other lenders reportedly sold over $10 billion in foreign currency to stabilise the lira, which has depreciated 15% against the US dollar in the past year and 83% over the past five years. Despite these interventions, analysts warn that the political crisis could further weaken investor confidence.
Protests erupted across major Turkish cities following the arrests, with demonstrators facing road closures, metro shutdowns, and internet restrictions imposed by authorities. The Istanbul Governor’s Office has banned public gatherings for four days, while social media access has been restricted.
İmamoğlu, who won Istanbul’s mayoral election in 2024 in a landslide, was widely expected to be nominated as the Republican People’s Party (CHP) candidate in an upcoming presidential primary on 23 March. His popularity had positioned him as Erdoğan’s most serious challenger, with recent polls suggesting he could defeat the incumbent president. CHP leaders have called the arrest a “coup” and vowed to fight the charges.
The crackdown has raised concerns among foreign investors, with analysts warning of long-term damage to Turkey’s financial stability. JP Morgan has revised its inflation forecast upwards, now predicting 29.5% inflation by year-end, up from its previous 27% estimate. The central bank, which had been pursuing gradual interest rate cuts, may now be forced to reconsider its policy as inflationary pressures mount.
Despite the domestic turmoil, analysts suggest that Erdoğan’s government may feel emboldened by the current geopolitical climate. Some argue that the lack of strong international responses to democratic backsliding in other countries has given Ankara greater confidence to act against opposition figures without fear of significant diplomatic repercussions.
