Turkish economic watchdogs hold urgent talks to shield markets

Türkiye’s top economic officials and executives, led by Treasury and Finance Minister Mehmet Simsek, held an urgent meeting on Sunday evening to discuss measures and coordination steps to mitigate market turbulence following political tensions stemming from an investigation targeting Istanbul Mayor Ekrem Imamoglu.

According to sources cited by business-focused bloomberght.com, the meeting included representatives from the Central Bank of the Republic of Türkiye (CBRT), Capital Markets Board (SPK), Banking Regulation and Supervision Agency (BDDK), Türkiye Wealth Fund, Borsa Istanbul, and state lender Ziraat Bank.

Participants agreed on shaping new economic measures and emphasized the importance of enhanced coordination among institutions.

Following the meeting, the SPK announced critical decisions aimed at stabilizing the markets ahead of Monday’s opening, including:

• A ban on short-selling activities on Borsa Istanbul to prevent speculative trading and reduce market volatility.
• Facilitation of share buybacks by publicly traded companies, enabling firms to more easily repurchase their shares to support stock prices and investor confidence.
• Relaxation of equity ratio rules for leveraged capital market transactions, allowing investors more flexibility in borrowing and trading, thus helping sustain liquidity in the markets.

Additionally, Borsa Istanbul announced that it will temporarily lower the order-to-trade ratio (OTR)—which regulates how many orders investors can place compared to actual trades executed—from 5:1 to 3:1, effective between March 24 and April 25. It also doubled the penalty fee for exceeding this ratio from ₺0.25 (0.66 cents) to ₺0.50. Analysts expect these changes to reduce volatility by discouraging excessive, algorithm-based speculative trading.

Borsa Istanbul has been facing a significant plunge since March 19, with the benchmark BIST 100 index plunging by over 16.7% within just a week. Year-to-date losses now stand at approximately 7.99%, driven primarily by the banking sector, which alone experienced a sharp decline of 26.52%. Investors have reportedly withdrawn around $60 billion from equity markets amid the turmoil.

The Turkish lira also experienced intense pressure, losing over 12% of its value by mid-week. However, losses were partly recovered after the central bank intervened by selling foreign currency into the market, reducing the depreciation to around 6%. Market observers estimate that the central bank utilized approximately $28 billion from its foreign reserves to stabilize the lira.

Central bank meets banking executives

Another key meeting during Sunday’s developments was held at the CBRT headquarters at 3 p.m. local time, involving senior executives of Turkish banks. Discussions centered on deepening collaboration to ensure sufficient liquidity and maintain market stability, addressing investor concerns.

The Banks Association of Türkiye stated after the meeting that relevant institutions would continue using all available tools effectively and decisively within market rules to sustain stability.

CBRT Governor Fatih Karahan reaffirmed after the meeting that all necessary actions within market regulations would be proactively employed, emphasizing the importance of market-friendly measures and continuous open communication.

‘We remain on duty’

Following the meetings, Minister Simsek also dismissed allegations of his resignation made by main opposition leader Ozgur Ozel in a post on X. “We remain on duty and will continue taking the necessary steps to ensure the healthy functioning of markets,” he said.

Similarly, Vice President Cevdet Yilmaz said in his post on X that the government remains committed to its economic program, emphasizing the strength of the economy‘s fundamentals.

“Our economy has strong fundamentals, and we remain committed to decisively and collaboratively implementing our economic program,” he stated.

“Our current account deficit remains low, our budget deficit is controlled, our central bank reserves are adequate, our banking system is robust, balanced growth continues to drive employment, unemployment has remained in single digits for a considerable period, and our primary priority—reducing inflation—continues on a downward trajectory.”