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Turkey Stabilizes Markets After Fund Crisis Fuels Selloff
Turkey's government and central bank initiated measures to restore market confidence following a significant selloff triggered by a domestic fund crisis. The move aims to prevent further capital flight and stabilize the lira, which faced pressure…
Turkish authorities intervened to calm financial markets after a liquidity crisis at a domestic real estate investment fund prompted a widespread selloff. The Capital Markets Board (CMB) announced on September 18 that the problematic fund, which manages assets worth USD 25 million, would be liquidated. This decision followed the fund's suspension of redemptions, which initiated a broader market decline.
The central bank also acted, raising the overnight lending rate by 200 basis points to 18% in an emergency session. This rate hike signaled a commitment to currency stability and aimed to counter speculative pressure on the Turkish lira, which had depreciated by 2% against the US dollar in intraday trading on September 17. Meanwhile, the Borsa Istanbul 100 Index fell 3.5% on September 17, extending its weekly losses to 7.8%.
Finance Minister Berat Albayrak reassured investors, stating on state television that the government would "take all necessary steps" to ensure market stability and prevent further contagion. Analysts noted that while the immediate actions addressed the fund's insolvency and supported the lira, sustained investor confidence would depend on transparent regulatory oversight and consistent economic policy in the coming weeks.
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