Turkish banks have learned the hard way that defending the national currency does not come cheap. In a bid to halt the free fall in the lira, they were forced to sell a staggering $8 billion just in the morning hours of March 19.
The dramatic 11% plunge was triggered by the arrest of Istanbul Mayor Ekrem İmamoğlu, who was detained by authorities on corruption allegations. Ironically, İmamoğlu was widely seen as the opposition’s frontrunner for the 2027 presidential elections.
Following his arrest, the Turkish lira sank to a historic low of 41.1 against the US dollar. The local stock exchange, Borsa İstanbul, was even forced to suspend trading twice in one day, apparently, to give markets a chance to catch their breath.
Finance and Treasury Minister Mehmet Şimşek quickly tried to calm the public, stating that the government was already taking action to ensure the healthy functioning of the markets.
