The Turkish lira plummeted to a record low against the dollar whilst the country's benchmark stock index dropped by as much as seven per cent following the surprise arrest of Istanbul mayor Ekrem Imamoglu.
The popular opposition figure and rival to President Recep Tayyip Erdogan was detained on charges he denies, sending shockwaves through Turkey's financial markets.
The lira was trading as low as 40.96 to the US dollar, according to Refinitiv data, before recovering slightly to 38.74 by early afternoon in Istanbul.
The greenback rose 5.53 per cent against the Turkish currency, which has long been under pressure.
The BIST 100 stock index managed to pare some losses after dropping as much as seven per cent earlier in the morning.
Imamoglu, who won the mayorship of Turkey's most populous city in April 2023, was arrested on charges including terrorism and organised crime, according to state media outlet Anadolu.
The Istanbul Chief Public Prosecutor's Office also issued warrants for 100 other people in Imamoglu's political party.
The 53-year-old mayor was widely seen as the next opposition party candidate for the Turkish presidency.
Imamoglu's Republican People's Party (CHP), Turkey's main opposition party, was set to hold a primary election on March 23.
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He was expected to emerge as the group's presidential candidate to challenge President Erdogan.
In a statement, the CHP flatly rejected the charges against Imamoglu, calling the move a coup.
"Making decisions on behalf of the people, using force to replace the will of the people or to obstruct it is a coup," wrote CHP chairman Ozgur Ozel on social media platform X.
"We are faced with a coup attempt against our next president."
Imamoglu posted a video on X with the caption: "The will of the people is being dealt a blow."
Access to numerous social media sites in Turkey has been curtailed, according to internet monitoring site Netblocks.
Live metrics showed restrictions on X, YouTube, Instagram and TikTok following the mayor's arrest.
Criticism of the arrest was swift, with many noting the timing just before Imamoglu's expected nomination.
"This is an artificial attempt to manipulate politics," Can Selcuki, managing director of consultancy Research Istanbul, told CNBC.
"Once again, it is all about Erdogan and his re-election," wrote Wolfango Piccoli at consultancy firm Teneo Intelligence in an analysis note.
"Recent opinion polls have consistently showed that Imamoglu would defeat Erdogan in a presidential election," Piccoli's report noted.
The analysis suggested Erdogan feels emboldened by Turkey's growing importance for European security and US President Donald Trump's return to office.
This has apparently given him confidence to "neutralise his domestic opponents" amid what critics describe as a "heightened climate of fear" in Turkey.
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The popular opposition figure and rival to President Recep Tayyip Erdogan was detained on charges he denies, sending shockwaves through Turkey's financial markets.
The lira was trading as low as 40.96 to the US dollar, according to Refinitiv data, before recovering slightly to 38.74 by early afternoon in Istanbul.
The greenback rose 5.53 per cent against the Turkish currency, which has long been under pressure.
The BIST 100 stock index managed to pare some losses after dropping as much as seven per cent earlier in the morning.
Imamoglu, who won the mayorship of Turkey's most populous city in April 2023, was arrested on charges including terrorism and organised crime, according to state media outlet Anadolu.
The Istanbul Chief Public Prosecutor's Office also issued warrants for 100 other people in Imamoglu's political party.
The 53-year-old mayor was widely seen as the next opposition party candidate for the Turkish presidency.
Imamoglu's Republican People's Party (CHP), Turkey's main opposition party, was set to hold a primary election on March 23.
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He was expected to emerge as the group's presidential candidate to challenge President Erdogan.
In a statement, the CHP flatly rejected the charges against Imamoglu, calling the move a coup.
"Making decisions on behalf of the people, using force to replace the will of the people or to obstruct it is a coup," wrote CHP chairman Ozgur Ozel on social media platform X.
"We are faced with a coup attempt against our next president."
Imamoglu posted a video on X with the caption: "The will of the people is being dealt a blow."
Access to numerous social media sites in Turkey has been curtailed, according to internet monitoring site Netblocks.
Live metrics showed restrictions on X, YouTube, Instagram and TikTok following the mayor's arrest.
Criticism of the arrest was swift, with many noting the timing just before Imamoglu's expected nomination.
"This is an artificial attempt to manipulate politics," Can Selcuki, managing director of consultancy Research Istanbul, told CNBC.
"Once again, it is all about Erdogan and his re-election," wrote Wolfango Piccoli at consultancy firm Teneo Intelligence in an analysis note.
"Recent opinion polls have consistently showed that Imamoglu would defeat Erdogan in a presidential election," Piccoli's report noted.
The analysis suggested Erdogan feels emboldened by Turkey's growing importance for European security and US President Donald Trump's return to office.
This has apparently given him confidence to "neutralise his domestic opponents" amid what critics describe as a "heightened climate of fear" in Turkey.
Find Out More...