Türkiye Stocks Slide as CHP Court Ruling Triggers Lira Defence
By Bosphorus News Türkiye Desk
A Turkish appeals court ruling that removed the elected leadership of the Republican People's Party, CHP, quickly moved from party politics into financial markets on Thursday, sending stocks lower, lifting risk premiums and prompting state lenders to defend the lira.
The Ankara Regional Court of Appeals annulled the CHP's 2023 congress, removed Özgür Özel as party chairman and reinstated former leader Kemal Kılıçdaroğlu. CHP Deputy Chairwoman Gül Çiftçi confirmed the ruling to Bloomberg, and the party said it would appeal.
The market reaction followed the court decision that annulled CHP's 38th congress and restored Kemal Kılıçdaroğlu's leadership, turning a legal battle over opposition leadership into a test of investor confidence in Türkiye's political and institutional outlook.
The Borsa Istanbul 100 index fell 6.1 percent after the ruling, triggering a market wide circuit breaker. Five year credit default swaps rose 12 basis points to 253 basis points, while government bond yields climbed across maturities. Some bonds fell as much as 1.4 cents on the day, marking their steepest single session decline since late March. Offshore lira rates in London also spiked.
Bloomberg reported that state lenders sold about $6 billion to support the lira in the hours after the ruling, citing traders familiar with the transactions. Roughly half of that amount was deployed immediately after the court decision was announced. Some market estimates placed total intervention closer to $9 billion by the end of the session.
The lira traded at 45.61 per dollar at 6:09 p.m. Istanbul time on Thursday, largely unchanged on the day after the intervention. By Friday morning, the stock index had recovered 1.9 percent, while the lira traded at 45.74 per dollar, 0.34 percent weaker.
CHP Vows Legal Challenge
The case has shadowed Özel's leadership since he defeated Kılıçdaroğlu at the party's 2023 congress. The court process had previously left Özel in place, but Thursday's ruling reversed that position and restored Kılıçdaroğlu to the party leadership.
Kılıçdaroğlu, who lost the 2023 presidential election to President Recep Tayyip Erdoğan and had largely withdrawn from public visibility, called for calm after the ruling. "I hope Türkiye will benefit from it," he said.
Özel refused to leave the party's Ankara headquarters and said the ruling would be challenged through every available legal channel. CHP Deputy Parliamentary Group Chair Ali Mahir Başarır told Reuters that the decision was "an attempted coup carried out through the judiciary and a blow against the will of 86 million people."
The CHP is Türkiye's oldest and largest opposition party. Istanbul Mayor Ekrem İmamoğlu, who has been declared the party's 2028 presidential candidate, has been in pretrial detention since March 2025 on charges including abuse of office, forming a criminal organisation and espionage. İmamoğlu denies the charges.
Thursday's ruling therefore strikes the opposition at two levels. Its elected party leadership has been removed by court order, while its declared presidential candidate remains in custody.
Market Risk Returns
The reaction echoed earlier bouts of politically driven market stress. After İmamoğlu was detained in March 2025, Turkish assets came under heavy pressure and the central bank spent tens of billions of dollars defending the lira over the following weeks, according to market reports and international coverage at the time.
This week's intervention was smaller and shorter in duration, but it came at a sensitive moment. Türkiye is already managing high inflation, pressure on energy imports and a wide current account gap. April inflation rose to 32.37 percent, the highest level in six months, while the central bank lifted its 2026 year end inflation forecast from 16 percent to 24 percent in May. The current account deficit reached $9.67 billion in March, its highest level in three years.
Timothy Ash, senior sovereign strategist at BlueBay Asset Management, told Arabian Gulf Business Insight that the central bank still had enough reserves to prevent a rapid currency slide. "They will defend the currency with foreign currency intervention and then hike policy rates if they have to," he said. "They will maintain the current FX policy."
The market reaction shows why the CHP case has moved beyond domestic party politics. Investors are pricing not only the immediate legal shock, but the wider question of institutional predictability before the 2028 election cycle.
The Friday rebound eased the first wave of selling, but the legal fight remains unresolved. The next test is whether CHP's appeal produces a quick reversal, whether state support keeps the lira stable without adding pressure on reserves, and whether foreign investors treat the ruling as a temporary shock or a deeper warning about Türkiye's political risk premium.
***Sources: Bloomberg, Reuters, Al-Monitor, Arabian Gulf Business Insight, CHP official statements, Borsa Istanbul market data and Bosphorus News reporting.