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Investing.com -- The Turkish lira is heading for its largest weekly decline in nearly two years, following the arrest of a significant opposition figure. This development has unsettled investors and led to a drop in the currency’s value.
The lira was trading 0.5% lower at 38 per dollar at 11:02 a.m. in Istanbul on Friday. This marks a 3.7% decline over the past five days, making it the currency’s worst performance since June 2023.
The downward trend started on Wednesday, when Turkish authorities detained Istanbul Mayor Ekrem Imamoglu. Imamoglu is considered President Recep Tayyip Erdogan’s most formidable opponent. In response to this, lenders sold up to $9 billion, and the central bank implemented a surprise interest-rate increase to support the currency.
The central bank’s move is intended to curb outflows from lira deposits, according to a report by Goldman Sachs Group Inc (NYSE:GS). economists Clemens Grafe and Basak Edizgil.
The report suggests that the bank’s decision was a defensive measure in response to the political uncertainty and its impact on the lira.
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