Turkey Ignites Protests, Lira Freefall With Arrest Of Erdogan's Rival

Turkish authorities have imprisoned President Recep Tayyip Erdogan's political rival, igniting nationwide protests and concerns that government policy will once again destabilize the Turkish economy.

Police arrested Ekrem Imamoglu, the mayor of Istanbul and Erdogan's principal challenger in the upcoming presidential elections, in a pre-dawn raid on March 19. The 54-year-old mayor‘s detention happened days before his party, the Republican People's Party (CHP), was reportedly due to nominate him as its candidate in the 2028 elections.

Authorities have started an investigation of Imamoglu for allegedly "aiding and abetting a terrorist organization." Other violations include "bribery, extortion, corruption, aggravated fraud, and illegally obtaining personal data for profit as part of a criminal organization."

Imamoglu denied these allegations on March 23, telling police they were "immoral and baseless." Around 100 other individuals are also being investigated on similar grounds.

"Imamoglu's only crime was that he was taking the lead in the polls," CHP party Chairman Ozgur Ozel said. "His only crime was that he would be the next president."

The arrest reverberated across the country's financial markets. Turkish lira hit record lows against the US dollar on March 19, reaching a nearly 40 ratio. The central bank pledged to maintain stability.

"Once again, President Erdogan's political agenda has inflicted serious damage on Turkey's economic outlook," Co-President of Teneo financial advisory firm, Wolfango Piccoli, wrote on March 24.

Turkish Protests Erupt After Opposition Figure's Arrest

Four days after Imamoglu’s arrest, the CHP held a vote that officially nominated Imamoglu as the party's presidential candidate for 2028. Ozel said the CHP had a "solidarity vote" open to non-party members and garnered 14.6 million ballots supporting Imamoglu.

CHP is the second-largest party in Turkey's parliament and the main opposition to Erdogan's ruling Justice and Development Party (AKP).

"Tens of millions of people in this country, who suffer from an oppressive government, a ruined economy, incompetence and lawlessness, have rushed to the polls to tell Erdogan that enough is enough," Imamoglu wrote in a statement released by Istanbul City Hall about the referendum.

"The ballot box will come, and the nation will give this government a slap it will never forget."

Turkey Ignite Protests As Erdogan Moves to ‘Outright Autocracy'

Imamoglu's arrests ignited waves of mass protests in response to what critics have described as a "lurch toward outright autocracy." Demonstrators from across 55 of Turkey's 81 provinces have taken to the streets since March 19 in protest of Erdogan.

Turkey's Interior Minister Ali Yerlikaya said on social media that 1,133 suspects were detained in "illegal activities”. He added that individuals” affiliated with 12 different "terrorist organizations" were detained from March 19 to 23.

Authorities have targeted Imamoglu’s professional career. Istanbul University annulled his diploma, a legal prerequisite for any presidential candidate in Turkey, one day before his arrest.

Authorities transferred Imamoglu and 51 others to the Silivri prison on the outskirts of Istanbul.

"Imamoglu's prosecution thus extends far beyond the fate of a single politician," Piccoli said. "It raises fundamental questions about Turkey's political trajectory: whether the country will continue to uphold even weak democratic norms or accelerate its slide into authoritarian rule."

Turkish Authorities Crack Down on Social Media Accounts

At least 10 journalists have reportedly been taken into custody for "covering the protests," according to the Media and Law Studies Association (MLSA), a Turkish human rights organization.

The government in Ankara has initiated a mass censorship crackdown on social media, barring hundreds of accounts, according to X.

"We object to multiple court orders from the Turkish Information and Communication Technologies Authority to block over 700 accounts," the social media platform said. Authorities have targeted news organizations, journalists, political figures, students, and others within Turkey, X said.

"We believe this decision from the Turkish government is not only unlawful," it added. “It hinders millions of Turkish users from news and political discourse in their country.”

Turkish Arrest of Imamoglu Sparks Market Freefall

Turkey's Borsa Istanbul benchmark index (BIST) fell over 16% last week following Imamoglu's arrest. It was the worst drop since the 2008 global financial crisis. Turkey's Capital Markets Board (SPK) enacted a ban on all short selling on March 23.

Turkey's Central Bank (TCMB) Governor Fatih Karahan told bankers on March 23 that the bank will use all instruments within market rules to maintain stability effectively. The TCMB raised its overnight rate unexpectedly on March 2. It spent $12 billion in foreign reserves to prop up the lira as of March 21.

Analysts have warned that increased TCMB restrictions will likely persist. This will lead to a weaker lira and higher import prices..

"A significant amount of the foreign reserves, built up over the last year, has evaporated in a matter of days," Turkish member of parliament Burak Dalgin told CNBC. "You save it up by the spoon and you throw it away with the shovel."

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