Turkey Protests have erupted across Turkey following the arrest of Istanbul Mayor Ekrem Imamoglu, a prominent rival to President Recep Tayyip Erdogan. Demonstrations, now on their third day, have drawn an estimated 300,000 people to Istanbul’s city hall, in Saraçhane district.
The arrest of Imamoglu occurred during a dawn raid on Wednesday at his residence. He faces allegations of corruption and links to terrorism, according to the Istanbul Prosecutor’s Office, who named him as “the leader of a crime group”. His supporters claim the arrest is politically motivated and aimed at removing a popular challenger to Erdogan, who has been in power for over two decades. Presidential elections are scheduled for 2028 but would have to be held earlier for Erdogan to run again. This led opposition to stage a mass rally on Wednesday to protest the detention, despite a government ban on public gatherings.
On Friday, Turkish riot police clashed with demonstrators approximately 500 metres from Istanbul’s city hall. Officers used pepper spray and tear gas to disperse hundreds of protesters who attempted to breach a barricade near the city’s historic aqueduct. Some protesters reportedly threw flares and other objects at the police. Water cannons were also deployed to break up demonstrations in Ankara, the capital, and Izmir, an Aegean coastal city.
CHP leader Ozgur Ozel addressed the rally on Friday, urging citizens to “peacefully demonstrate, express our democratic reaction, and exercise our constitutional rights.” Ozel accused Erdogan of manipulating the judiciary after allegedly failing to defeat the mayor “in a fair way“. He had earlier accused Erdogan’s government of staging a coup, stating that “making decisions on behalf of the people, using force to replace the will of the people or to obstruct it, is a coup.”
In addition to Imamoglu, authorities have detained several other prominent figures, including Resul Ekrem Sahan, the mayor of Istanbul’s Sisli district, and the general secretary of the Istanbul Municipality, as well as journalists, local politicians, businesspeople, and municipal administrators.
President Erdogan addressed the situation on Friday, stating that authorities “would not allow public order to be damaged,” and vowed not to “give in to vandalism or street terrorism.”
“An anti-corruption operation in Istanbul is being used as an excuse to stir unrest in our streets. I want it to be known that we will not allow a handful of opportunists to bring unrest to Turkey just to protect their plundering schemes,” Erdogan said.
The Interior Ministry reported that over 50 people have been detained, and 16 police officers have been injured. Authorities in Ankara and Izmir announced a five-day ban on demonstrations, following a similar measure imposed in Istanbul. Road closures and metro stop closures near the university in Ankara have also been implemented.
Impact on Economy in Turkey
The political turmoil has significantly impacted Turkish financial markets. Turkish stocks were on track for their worst week since the 2008 financial crisis. The lira was headed for a 4% weekly slump, despite the central bank’s interventions. The recent selloff in stocks triggered two market-wide circuit breakers on Borsa Istanbul.
By 1450 GMT on Friday, the benchmark BIST-100 index was trading 7.82% lower, and the banking index had fallen 9.37% after trading resumed at 0857 GMT. The BIST-100 index is on track for a 15% weekly plunge, its worst drop since October 2008.
Turkey’s sovereign dollar bonds also declined for the third consecutive day, with longer-dated issues shedding 2 cents and heading for a weekly loss of over 3 cents, the largest since January 2024. The cost of insuring Turkey’s debt against default widened by 18 basis points to 322 bps, according to data from S&P Global Market Intelligence, the widest levels since March 2024.
The Turkish lira traded at 38.0050 against the US dollar, unchanged from the previous close but above Wednesday’s record low of 42. The currency is down 6.7% so far this year.
The central bank of Turkey reportedly sold approximately $10bn in foreign exchange after Wednesday’s record low, according to economists’ calculations. Liquidity measures were also taken to limit volatility and ease foreign exchange demand.
Additionally, the central bank suspended its one-week repo auction and increased its overnight lending rate to 46%, a move economists estimate to be equivalent to a 350-400 basis-point tightening in policy. These measures are expected to increase funding costs, potentially impacting banks’ balance sheets by increasing loan interest rates and reducing credit volumes.
