Turkish assets were broadly higher on Monday to recoup some of their losses after last week's slide, as authorities announced new measures and sought to calm markets following the detention of Istanbul's mayor.
Türkiye remained front and center amongst emerging markets after a Turkish court on Sunday jailed Istanbul Mayor Ekrem Imamoğlu, pending trial on corruption charges.
The government repeatedly denied allegations by Imamoğlu's main opposition Republican People's Party (CHP) that the investigations were politically motivated and said the courts are independent.
Stocks rose 3.2% earlier on Monday and were almost 1% up at 4 p.m. local time, coming off their worst weekly showing since the 2008 global financial crisis.
Late Sunday, the Capital Markets Board (SPK) announced a decision to ban short-selling across all stocks on the Istanbul bourse eased share buyback limitations and equity ratio requirements until April 25 to prevent further equity losses.
Treasury and Finance Minister Mehmet Şimşek held meetings throughout Sunday with regulatory institutions regarding the measures to be taken in light of recent developments, a report by private broadcaster Bloomberg HT said.
A meeting later on Sunday included top officials from the Central Bank of the Republic of Türkiye (CBRT), SPK, the Banking Regulation and Supervision Agency (BDDK), the Türkiye Wealth Fund (TWF), Borsa Istanbul Stock Exchange (BIST), and Ziraat Bank representing public banks, the report said.
"We are on duty. We will continue to take all necessary steps for the healthy functioning of the markets," Şimşek wrote on social media platform X.
"Please do not pay attention to unfounded news," he added, after some reports claimed he was planning to resign.
The Turkish lira was last at 37.95 per dollar after hitting a record low of 42 last week.
Imamoğlu's detention last Wednesday plagued markets, sending the lira, stocks and bonds sharply lower.
In response, Türkiye's central bank raised a key interest rate in an unscheduled meeting Thursday.
The Borsa Istanbul Stock Exchange's benchmark BIST 100 index is down more than 14% from levels seen at the start of last week, while the lira is down more than 3%.
The BIST 100 index ended last week down 16.6%, its worst drop since the global financial crisis in October 2008. The banking sub-index was 3.23% higher by 8:56 a.m. GMT after falling more than 26% last week.
Vice President Cevdet Yılmaz also sought to reassure markets later on Sunday, saying authorities were steadfastly implementing the government's economic program and taking necessary steps.
"The foundations of our economy are strong. We continue to implement our economic program with determination and coordination," Yılmaz wrote on X.
"Our current account deficit is low, our budget deficit is under control despite earthquake expenditures, our central bank reserves are at sufficient levels, our banking system is robust, and while balanced growth and employment increase continue, our unemployment rate has remained in single digits for a long time. Inflation, which we see as a primary priority, is on a downward trend," he said.
"All our relevant institutions are closely monitoring the markets and periodic developments, and are taking necessary actions."
Earlier on Sunday, Fatih Karahan, the central bank's governor, met board members of Türkiye's Banks Association (TBB) to evaluate the market volatility.
Karahan told the commercial lenders the bank would use all instruments decisively to maintain stability, according to a TBB statement.
"During the technical meeting, it was stated that all kinds of tools will continue to be used effectively and decisively within the market rules, in close cooperation with all relevant institutions, to maintain stability," the statement read.
Karahan vowed to do whatever is necessary within the framework of market regulations.
"We place great importance on ensuring that the measures we take are market-friendly," he noted. "Our two-way communication channels remain constantly open."
Türkiye's international sovereign bonds also clawed back some of their losses on Monday, with the 2045 maturity up 0.7 cents to be bid at 83.7 cents on the dollar, Tradeweb data showed, after falling more than 3 cents last week.
