NEWS

The Turkish Capital Markets Authority has imposed new restrictions aimed at enhancing financial stability and reducing market turbulence. These measures include a ban on short selling for all stocks and relaxed rules on share buybacks. This move follows the sharp decline in the Istanbul Stock Exchange Index, which lost 17% of its value after the arrest of a prominent opposition figure.

Regulatory Adjustments to Support the Markets

The authority announced these measures on Sunday evening, expanding the previous ban, which had been limited to the top 50 listed companies, to include all publicly traded stocks. Additionally, it granted listed companies greater flexibility to repurchase their shares at prices exceeding the last recorded closing price—a step aimed at stabilizing stock values and mitigating losses. Moreover, the authority reduced the minimum margin requirement from 35% to 20%, making borrowing and investing in the market more accessible.

Impact of Ekrem İmamoğlu’s Arrest on the Markets

These decisions follow the political shockwave triggered by the arrest of Istanbul Mayor Ekrem İmamoğlu, a key opponent of President Recep Tayyip Erdoğan. The arrest has caused significant market disruptions, with the Turkish lira plummeting to record lows against the US dollar, bond yields surging, and the banking sector index suffering its worst weekly performance since 2001.

Central Bank Moves to Contain the Crisis

In an attempt to calm the markets, the Turkish Central Bank held an emergency meeting on Thursday, where it announced an increase in the overnight lending rate while keeping the main interest rate unchanged. On Sunday, the bank intensified its efforts by engaging with senior banking officials to prepare for Monday’s trading session, which is expected to experience high volatility due to mounting political and economic tensions.

Turkish Lira Declines Despite Interventions

In early Asian trading, the Turkish lira dropped to 37.95 against the dollar, marking a 1.5% decline. These regulatory measures are set to remain in place until April 25, in an effort to restore market confidence and ease financial pressures.

Financial Interventions to Curb Currency Volatility

A central bank official told Bloomberg that Turkish banks sold up to $9 billion last week in an effort to curb currency fluctuations. Policymakers also unexpectedly raised the overnight lending rate on Thursday as part of their broader strategy to support the lira and stabilize the financial markets.