Turkey's central bank to meet with lenders Sunday

Turkish central bank officials are set to meet with commercial bank leaders on Sunday. This meeting comes after market instability caused by the arrest of a prominent opposition politician. The discussion will focus on coordinating efforts to address the recent selloff in Turkish markets. Ekrem Imamoglu, the mayor of Istanbul and a leading opponent of President Recep Tayyip Erdogan, was taken into custody last week on corruption charges. This news has unsettled investors and led to significant declines in the Turkish lira, stocks, and bonds. In response, Turkey's Treasury and Finance Minister Mehmet Simsek met with banks on Friday. He assured them that the government would use all available tools to manage what they described as “temporary” market volatility. To support the lira, the central bank raised its overnight lending rate by 200 basis points to 46%. Additionally, it suspended lending at its benchmark rate of 42.5% for an unspecified time. The central bank also plans to conduct a liquidity bill auction for the first time in nearly 20 years to reduce excess lira in the market. As a result of these measures, the overnight reference rate increased significantly, reflecting higher funding costs for banks.