The high cost of the operation
The consequences caused by the operations against İmamoğlu on the economy were reflected in the officials' data. The foreign investor that Şimşek tried to reassure made a sale of 883 million dollars. Hot money strategy of the economy management is now bankrupt
The cost of the operations against İstanbul Metropolitan Municipality Mayor Ekrem İmamoğlu and municipal bureaucrats on the economy is getting heavier and heavier. While the high interest rate and hot money policy of the government since June 2023 has been bankrupt, the markets experienced sharp fluctuations after the operations.
On 19 March, when İmamoğlu was detained, the USD/TL rose to 42 and reached its historical peak. Although the exchange rate dropped to TL 38 after the interventions made by the Turkish Central Bank (TCMB) by selling foreign currency, the demand for foreign currency increased rapidly in the country. Foreign investors began to leave Turkey while there were fierce sales in İstanbul Stock Exchange.
According to the weekly data published by the Turkish Central Bank, total reserves decreased by 7 billion 968 million dollars from 171.1 billion dollars to 163.1 billion dollars in the week of 21 March. Foreign exchange reserves decreased by 4.7% to 8 billion 739 million dollars in the last week, according to the Turkish Central Bank's data.
Net reserves excluding swaps recorded the highest decline since the pandemic. Reserves decreased by 13 billion dollars to reach 52 billion dollars last week.
LOCALS GO FOR FOREIGN CURRENCY
Although the rise in the exchange rate was tried to be prevented by reserve sales, there was a rapid increase in foreign currency deposits. According to TCMB data, FX deposits increased by 5.9 billion dollars last week. Foreign exchange demand of legal entities was higher than real persons last week. FX deposits of legal entities and real persons increased by 3.2 billion USD and 2.7 billion USD, respectively.
With the latest increase due to the operations, the total foreign currency deposits of residents reached 185 billion dollars.
FOREIGNERS LEAVE
Efforts of the economy management to attract hot money were wasted. Foreigners, whom Treasury and Finance Minister Mehmet Şimşek has been trying to attract since June 2023, started to leave last week. In the week of 21 March, foreign investors sold 443.8 million dollars of shares and 439.5 million dollars of bonds. While foreigners made the highest share purchase of 15 months with 480 million dollars in the previous week, they also bought 1.5 billion dollars of bonds.
Total sales in shares and bonds in the week of 21 March were $ 883.3 million. Share sales were at the highest level since the week of June 2024.
After seeing the lowest 8 thousand 984 points last week, the İstanbul Stock Exchange 100 index completed the week at 9 thousand 44 points.
The fluctuations in the economy once again revealed the cost of the government's policy of using the law and the economy as a political tool.
Note: This article is translated from the original Turkish version titled Operasyonun ağır faturası, published in BirGün newspaper on March 28, 2025.
