(Bloomberg) — Turkish central bank officials will meet with commercial lenders on Sunday amid market volatility triggered by the arrest of a key opposition politician, said people with direct knowledge of the matter.
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Officials will discuss possible coordination with banks and take stock of the recent selloff in Turkish markets, said the people, who asked not to be identified as the meeting is private.
The central bank declined to comment.
The meeting, scheduled to take place Sunday afternoon local time, marks one of the first high-level gatherings between the nation’s lenders and the monetary authority since Istanbul’s popular mayor, Ekrem Imamoglu, was taken into custody last week, rattling markets. The lira, Turkish stocks and debt subsequently posted some of the world’s biggest declines as investors weighed the risk of a potential reversal in Turkey’s economic policies.
Treasury and Finance Minister Mehmet Simsek met with banks on Friday, telling them that policymakers would use all the tools at their disposal to mitigate what said was a “temporary” volatility in markets.
Imamoglu, who’s viewed as President Recep Tayyip Erdogan’s most prominent challenger, was jailed on Sunday on corruption charges.
The central bank already stepped up its defense mechanism of the lira in the past week to ensure financial conditions remain tight. It raised its overnight lending rate by 200 basis points to 46%, raising the average cost of funding for commercial lenders. It suspended lending at its lower, benchmark rate of 42.5% for an unspecified period.
The bank also said it will hold a liquidity bill auction with 91-day maturity, the first such action in nearly two decades, aimed at absorbing excess lira.
Following the moves, the lira overnight reference rate, a gauge of the cost of overnight funding, rose more than three percentage points to 45.7%.
(Updates with central bank’s previous moves from seventh paragraph.)
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