The Turkish economy was thrown into fresh turmoil after the unexpected arrest of Istanbul’s popular mayor, Ekrem Imamoglu, a key opposition figure and potential challenger to President Recep Tayyip Erdogan in the upcoming elections. The news triggered an immediate and sharp reaction across financial markets, with the Turkish lira crashing to an all-time low and the nation’s benchmark stock index experiencing a significant sell-off.

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Lira Hits Record Low Against the Dollar

On Wednesday, the Turkish lira (TRY) fell to a historic low of 40.96 against the U.S. dollar, according to Refinitiv data. By midday in Istanbul, it had slightly recovered to 38.74, but the damage was done—marking a 5.53% drop in value within hours.
The currency has been under persistent pressure in recent years due to concerns over political instability, unorthodox monetary policies, and high inflation, which officially stands at over 65% as of February 2025, according to Turkish Statistical Institute (TurkStat).

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Borsa Istanbul (BIST 100) Suffers Steep Losses

The BIST 100 index, Turkey’s leading stock benchmark, plummeted by as much as 7% in early morning trading. Though it later pared some losses, the index still closed the day deep in the red, reflecting investors' growing concerns about Turkey’s economic and political outlook.

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Why Was Ekrem Imamoglu Arrested?

Ekrem Imamoglu, who has served as the mayor of Turkey’s largest city since his stunning victory in April 2023, was detained on charges of terrorism and organized crime, according to state-run Anadolu Agency.
The Istanbul Chief Public Prosecutor’s Office also issued arrest warrants for 100 other members of Imamoglu’s Republican People’s Party (CHP), further escalating the crackdown.

Imamoglu, 53, has long been considered a rising star in Turkish politics and was widely expected to secure the CHP’s nomination as its presidential candidate at the party's March 23 primary election. His arrest, just days before the nomination, has sparked accusations of a politically motivated move aimed at eliminating Erdogan’s most formidable rival.

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CHP Leaders Condemn Imamoglu’s Arrest as a ‘Coup’

Ozgur Ozel, chairman of the CHP, strongly denounced the arrest, describing it as a blatant attack on democracy.
“Seizing the decision-making power of the people through force is a coup,” Ozel stated on X (formerly Twitter).
He added, “There is a deliberate effort underway to obstruct the nation’s will and prevent the people from choosing their next president. This is nothing short of a coup attempt against democracy.”

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Social Media Blackout Fuels Public Anger

According to internet monitoring group NetBlocks, Turkey imposed restrictions on major social media platforms shortly after news of Imamoglu’s arrest broke. Access to X, Instagram, YouTube, and TikTok was significantly limited, making it difficult for citizens to share information and express outrage.
This is a familiar tactic by Turkish authorities, often deployed during times of political unrest.

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Analysts Warn of Economic and Democratic Setbacks

“This is an artificial attempt to manipulate politics,” said Can Selcuki, Managing Director of Research Istanbul, in an interview with CNBC.
He added, “Moves like this have never succeeded in the long term and only delay Turkey’s economic recovery and democratic progress.”

International observers argue that Erdogan views Imamoglu as a serious threat to his grip on power.
A recent Teneo Intelligence report, authored by Wolfango Piccoli, stated:
“Consistent polling has shown that Imamoglu would likely defeat Erdogan in a head-to-head presidential race. His detention underscores the heightened climate of fear in Turkey, reinforcing concerns that no opposition figure is safe.”
Piccoli further noted that Erdogan, who has ruled Turkey since 2014, is emboldened by Turkey’s renewed importance to European security and by the potential return of former U.S. President Donald Trump, which he believes will strengthen his position internationally.

What This Means for Turkey’s Future

Turkey’s economy was already struggling before this latest political crisis. The Central Bank of the Republic of Turkey (CBRT) raised interest rates to 45% earlier this year in an effort to tame rampant inflation. However, investor confidence remains shaky, and capital flight has increased.

Imamoglu’s arrest may lead to further instability, both economically and politically. Critics argue that Erdogan’s administration is undermining democratic institutions to maintain power, deepening Turkey’s isolation from Western allies and investors.

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International Reactions

So far, there has been no official response from Ankara’s Western allies, although CNBC confirmed it has reached out to the Office of the Turkish Presidency for comment.
Human rights organizations and watchdogs are expected to issue statements in the coming days, as Turkey's political trajectory remains uncertain.

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