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Turkey sought to calm international investors on Tuesday amid days of protests sparked by the arrest of President Recep Tayyip Erdoğan’s chief rival last week.
The jailing of Istanbul mayor Ekrem İmamoğlu, the country’s most popular politician, caused political and financial turmoil after igniting the biggest public protests in more than a decade and spurring investors to sell Turkish assets over rule of law concerns.
As protesters prepared for a seventh night of demonstrations, finance minister Mehmet Şimşek and central bank governor Fatih Karahan held a conference call with international investors to reassure them they would stick with the government’s recovery programme for the $1.3tn economy.
One investor familiar with the call said the government presented figures showing that a majority of the outflows from the Turkish lira were hedge funds forced to sell highly leveraged positions. Retail outflows by Turkish investors had so far been a small factor, according to these figures.
“If the flighty money has left, and the remainder is ready to sit tight, then the Turkish central [bank] can probably weather another episode like this again — although it would be difficult,” said another fund manager who joined the call.
He added that the central bank said it had sold $25bn of foreign currency reserves to bolster the lira after investors fled Turkish assets last week, with Friday the heaviest day of selling. The finance ministry said about 4,500 international investors attended the call.
Turkish markets appeared to steady on Tuesday, with the Istanbul stock market up almost 4.5 per cent after the call ended, and the lira slightly up at 37.9 to the US dollar.
İmamoğlu’s arrest on March 19 on corruption charges, which he denies, was a dramatic escalation in Erdoğan’s crackdown on the opposition. Police have clashed with demonstrators, who warn that the arrest marks a worrying step in the president’s move to turn Turkey into an autocracy. There have been protests around the country, including in Istanbul.
The 71-year-old president has called the protests “street terrorism” and insisted that the judiciary acted independently against İmamoğlu.
Close to 1,400 people, a large number of whom are students, have been jailed pending trial on charges connected to the protests, Özgür Özel, the leader of the Republican People’s party (CHP), said at the seventh night of protests outside Istanbul’s city hall on Tuesday.
Among them were seven journalists, including a photographer for AFP, for their coverage of the protests, the journalists’ union Disk Basın-İş said.
“What the journalists all have in common is that they recorded and witnessed police violence and were trying to convey the truth to the people,” said union board member İzel Sezer. “We know the motive is to intimidate the nation’s journalists.”
Özel said Tuesday’s demonstration would be the last outside city hall, but he invited supporters from across the country to attend a CHP rally on the Asian side of Istanbul on Saturday. “We will gather in the millions,” he said.
Istanbul’s city council on Wednesday would elect a CHP member to stand in for İmamoğlu in an effort to prevent the government from seizing control of the municipality, Özel has said.
Özel on Tuesday visited İmamoğlu in the Silivri prison west of Istanbul, where several political dissidents, including two other CHP mayors, are being held.
“They thought it would be so easy to say, ‘Since I can’t and won’t be able to defeat İmamoğlu, I will just get rid of him.’ They didn’t take into account [the backlash],” Özel said outside Silivri prison.
The CHP has called on supporters to shun companies it says back Erdoğan’s government, ranging from a chain of coffee shops to booksellers and a tour operator.
Cevdet Yılmaz, Turkey’s vice-president, called the boycott “of our local and national companies a harmful and dangerous approach”. He also told the Habertürk television channel that the impact from the market volatility following İmamoğlu’s arrest would be temporary, though the lira could weaken by “one or two points”.
Authorities have seized three construction companies belonging to municipality officials who were arrested with İmamoğlu, the state Anadolu news agency said.
Erdoğan blamed the CHP for “baseless, artificial fluctuations” in financial markets after İmamoğlu’s arrest. “We will not surrender to the ambitions of those who want to set the country on fire,” he said late on Monday.
The CHP has tapped into Turkey’s economic malaise, with inflation running at almost 40 per cent. In municipal elections last year, it won the largest vote share nationwide, delivering Erdoğan’s biggest setback in two decades.
İmamoğlu defeated Erdoğan’s handpicked candidate for mayor of Turkey’s largest city, winning re-election by more than 11 percentage points. He has consistently outperformed Erdoğan in surveys of voters’ next choice for president, though elections are not scheduled until 2028.